Middle East’s evolving alliances continue to shift
26 December 2024

Within and without, alliances in the Middle East are in a state of flux.
The brittle tensions that pitted three Gulf states against Qatar, before the January 2021 Al-Ula Agreement found an amicable resolution, have given way to burgeoning rapprochement between the UAE and Qatar.
On the other hand, the UAE-Saudi rivalry has intensified in recent years, culminating in late March 2024 in Riyadh’s lodging of an official complaint at the UN General Assembly, rejecting the UAE’s designation of territory adjacent to the kingdom as a protected maritime area.
Differences over the two countries’ Opec strategies, and their approaches to regional conflicts – notably Yemen and Sudan – have also come to the fore.
Latterly, a de-escalation has helped to defuse those tensions. Saudi Crown Prince Mohammed Bin Salman Bin Abdulaziz Al-Saud and UAE President Sheikh Mohamed Bin Zayed Al-Nahyan have strived to improve relations, with a meeting between the two leaders in late May doing much to stem the fraying of a once-close relationship.
Thawing enmities
The bigger shift in regional relations involves Iran. The Gaza conflict, fanning out to Lebanon, has helped reframe Gulf states’ ties with Tehran.
This was evident in the landmark visit of Iranian Foreign Minister Abbas Araghchi to Bahrain in October for a meeting with King Hamad Bin Isa Al-Khalifa – the first such visit in 14 years.
With a reputation as the Gulf state most hostile to Iran, Bahrain’s recent diplomatic outreach to Tehran reflects its sense that talking to the enemy is better than isolation, in the context of the current heightened regional tensions.
The Chinese-orchestrated Saudi-Iran agreement of 2023 at least provides a template for Manama to follow.
Bahrain’s overtures to Iran also reflect a new security dynamic in the region.
With Iran-backed militias in Iraq showing themselves capable of dispatching missiles as far as Israel, some regional analysts say the Gulf states’ leaders are increasingly anxious that these Shia militias could just as easily target them.
In this sense, building relationships with the Islamic Republic is one way of ensuring that domestic territory is not targeted by Iranian proxy militias.
China is playing to the crowd. It … is looking to put a wedge between the US and the wider world, including Southeast Asia
Bill Hayton, Chatham House
Beijing’s broadening reach
The region has also found itself increasingly engaged east of the Suez.
China’s regional role remains a work in progress, with the Saudi-Iran agreement arising out of Beijing’s willingness to offer a non-Western alternative to conflict mediation.
From Riyadh’s point of view, China’s leverage with Iran, primarily through extensive trade and investment links, made it the ideal broker for an agreement that Saudi Arabia views as key to helping dial down the threat posed by Iran.
The backdrop to such Gulf engagements with the likes of Iran and China is the evident reluctance of the US to provide the blanket security guarantees to its regional allies that it once did.
This has incentivised the Gulf states to attempt diplomatic entreaties with regional adversaries, compelled by an understandable need for self-preservation.
This has wider significance, placing China in a more prominent role in influencing regional politics – a sharp contrast with its previous low-key strategy and one that China watchers such as Bill Hayton, Asia-Pacific associate fellow at the thinktank Chatham House, see as being driven by interests rather than by tactical power politics.
For Beijing at least, its involvement in 2023’s Saudi-Iran deal affords an opportunity to reinforce its regional influence, while demonstrating its support for the Palestinian cause – an issue that resonates with many across the region.
“China is playing to the crowd,” says Hayton. “It has decided that large parts of [the world] don’t like Israel and it is looking to put a wedge between the US and the wider world, including Southeast Asia.”
China is meanwhile looking to deepen relations beyond Iran.
Despite the evident importance it places on maintaining close relations with the Islamic Republic – most notably as the main buyer of the latter’s crude oil exports – China also sees value in building ties with Saudi Arabia.
The recent accession of Saudi Arabia, alongside the UAE, Egypt and Iran, to the Brics geopolitical bloc affords further means for China to expand its influence in the region.
From Saudi Arabia’s point of view, Brics membership could provide opportunities to broaden its engagement beyond the Western powers with which it has been allied for generations.
The Trump factor
Given that when Donald Trump resumes his occupancy of the Oval Office in late January the US is likely to take a maximum-pressure approach towards Iran once again, a more multipolar disposition could offer the Gulf states something of a hedge.
Saudi Arabia could equally find itself in a position to be a conduit between the wider region and the Trump White House.
With inbound Trump appointees including the fiercely pro-Israel Mike Huckabee as the proposed US ambassador to Israel, there is a concern that the White House could give a green light to Israel to annex the West Bank and embed its occupation of Gaza.
The region may then find itself counting on Riyadh’s clout in Washington to restrain Trump from pursuing positions that would only escalate regional tensions.
Between the likes of the EU, the UK and China looking to revive relations with Saudi Arabia, and Russia still being a partner in the Opec+ group, the Saudi leadership may find itself the centre of regional attention in 2025.
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Sabic reported a net loss of $100m for the second quarter of 2026, which it attributed to the impact of the Iran-US regional conflict on its business.
The company had only returned to profit in the first quarter, registering a net income of $3.52m, after posting a full-year 2025 loss of $6.87bn.
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UAE leads Mena project pipeline recovery6 August 2026
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GlobalData’s Construction Projects Momentum Index (CPMI) for the Mena region rose to 0.84 in June, up 5% from 0.80 in May, leaving the region third globally behind South Asia and Sub-Saharan Africa. The three-month moving average held at 0.95, unchanged from May.
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Regional deals
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Brookfield has been directly investing in the region since 2015 and has built a portfolio of more than $16bn of managed assets across private equity, real estate and infrastructure.
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