Saudi Arabia and Iran become unlikely bedfellows

By Javier Blas

In the Middle East, the adage “the enemy of my enemy is my friend” has ruled. Thus, Saudi Arabia and its allies quietly — and at times not so quietly — tended to side with Israel against Iran.

Until now.

Caught between what they perceive as two evils, Riyadh and other Arab nations in the Persian Gulf are now whispering neutrality with Iran. In part, the behind-the-scenes diplomatic maneuvering reflects their inability to influence the crisis, lacking leverage and influence over the Islamic republic and the Jewish state; in part, it reflects their fear they will become collateral damage.

The non-involvement stance is the most obvious result of a whirlwind of meetings between Persian and Arab diplomats over the last couple of weeks. But its roots go back several years. For global financial markets, it has an important implication: It makes the worst-case scenario of a series of attacks and counterattacks against the region’s oil facilities less likely.

I don’t think the oil market has fully appreciated the change in tone of Saudi-Iranian relations, including the re-establishment of diplomatic relations last year after Chinese mediation and ongoing regional diplomacy. For Beijing, the relationship between the two most influential Middle East nations matters: It buys more Saudi and Iranian crude than anyone else. And so the Middle East of 2024 isn’t the same one from five years ago. Oil may be less at risk than many bulls hope.

The most significant of all those diplomatic meetings was a rare visit by Abbas Araghchi, the Iranian foreign minister, to Saudi Arabia last week. In Riyadh, he was received not just by his Saudi counterpart, as would be typically the case, but also by Crown Prince Mohammed bin Salman. Saudi state-owned media published a series of photographs from the meeting. Prince Mohammed was smiling; Araghchi looked at ease. The choreographed message was not-so-subtle: Perhaps we aren’t friends, but we don’t need to be enemies.

Earlier, Araghchi met on Oct. 3 with all the foreign ministers of the Gulf Cooperation Council, a Saudi-led umbrella group that includes the United Arab Emirates, Kuwait, Bahrain, Qatar and Oman. Abdel Aziz Aluwaisheg, a senior GCC diplomat, said the meeting could mark “the start of a new phase of relations” between Iran and its Arab neighbors.

The shift is the latest sign of two trends. The first is the détente between Iran and Saudi Arabia that started in mid-2021 and consolidated in 2023. The second is the frustration in Riyadh with the White House and the right-wing government of Benjamin Netanyahu.

During the “maximum pressure” American campaign against Iran, between 2017 and 2021, Saudi Arabia sided with President Donald Trump — and, implicitly, with Israel. That changed in 2019 after pro-Iranian militias used a barrage of drones and missiles to attack the most important of all the Saudi oil installations: the processing plant of Abqaiq. The kingdom not only discovered it was vulnerable in a way it had never appreciated, it also felt let down by Trump, which refused to retaliate against Tehran.

Since then, Riyadh has reevaluated what’s in its national security interest. It doesn’t seek friendship with Tehran, but it’s no longer interested in supporting the US and Israel against Iran as it did before. For the kingdom, safeguarding its oil cash flow is paramount, so it is de-risking the billions of dollars it’s pouring into tourism projects as part of its Vision 2030 program. Luxury hotels in the Red Sea attract foreigners into the kingdom; bombs and conflict do not. It’s another part of what I call the “Saudi First” policy.

Tehran has, in some ways, met Riyadh halfway. The number of attacks from Iran-backed Houthis against Saudi Arabia has declined significantly in recent months. Notably, the Houthis of Yemen haven’t targeted any Saudi oil installations, a departure from the string of strikes in 2019, 2020, 2021 and 2022.

In the current crisis, Iran appears to want two things from the Saudis. The first is assurances that their territory won’t be used to facilitate an Israeli attack. The second is that Riyadh uses its influence in Washington to pressure Israel into cease-fire talks to end the conflicts in Gaza and Lebanon. If Israeli warplanes can’t overfly the kingdom (nor over the UAE, Kuwait, Qatar, Oman and Bahrain), it would force them to take longer routes either via Syria and Iraq (neither of them have air defenses to stop the Israelis), flying over Turkey (very unlikely as Ankara would oppose) or flying a long arch over the Red Sea and the Indian Ocean.

In return, Saudi Arabia wants a promise it won’t be a target of opportunity in any Iranian retaliation against Israel. In Riyadh, royals seemed until very recently worried that if Tehran suffers a devastating Israeli blow, it could respond striking the Saudi oil fields, either directly or using one of its regional proxies.

Both sides have not revealed if a deal is on the table, but reading between the lines it looks like both sides have, at the very least, an understanding. As such, I won’t expect that Riyadh will open its skies to the Israeli air force nor that Tehran will put its neighbor’s vast oil fields on the target list.

The Middle East often makes for unlikely bedfellows. Nothing puts aside differences like money. And for Saudi Arabia and Iran, money is oil.