STRAIT DIPLOMACY STIRS OIL MARKETS AS SAUDI ARABIA STRUGGLES TO RALLY SUPPORT AGAINST HOUTHIS
Brent crude tumbled 2.9% to $104.52 a barrel on Friday after news broke that Gulf Cooperation Council foreign ministers will convene with Iran’s counterpart on Monday, the first such gathering since the U.S. and Israel launched military operations against Tehran. Markets read the meeting as evidence that diplomatic channels are finally opening after weeks of regional deadlock.
The diplomatic opening carries immediate operational consequences for global energy flows. Oman and Iran have been developing a proposal to temporarily manage traffic through the Strait of Hormuz, the world’s most critical oil chokepoint. If GCC members can be persuaded to endorse such an arrangement, it could unlock negotiations with Washington over the U.S. naval blockade that has crippled Iranian oil exports while simultaneously constraining regional supplies.
Current conditions reflect a grinding stalemate. The U.S. military blockade prevents Iran from shipping oil through its ports, while Iranian drone and missile attacks have kept other regional exporters from returning to prewar production levels. American naval operations have managed to guide non-Iranian oil through the strait, bringing regional exports to roughly two-thirds of their prewar volume. This partial flow has stripped Iran of its most potent political leverage while devastating Tehran’s economy.
Iran’s strategy appears to be escalating pressure on multiple fronts. Recent missile attacks on U.S. bases, assaults on American warships, and support for Houthi forces in Yemen represent an attempt to regain negotiating power. The Houthis have seized territory near the Bab al-Mandab Strait, the vital Red Sea passage linking to the Arabian Sea. That positioning directly threatens Saudi Arabia’s East-West Pipeline, which the kingdom diverted to the Red Sea after Iran closed the Strait of Hormuz. Reports indicate the Houthis have already attacked both the pipeline and Saudi tankers in recent operations.
Saudi Arabia, meanwhile, faces unexpected isolation as it seeks to counter the Houthi threat. Crown Prince Mohammed bin Salman made two calls to President Donald Trump on Thursday requesting U.S. military strikes against the Houthis, and was rebuffed both times. The Trump administration offered only intelligence support and targeting data, making clear that American forces will remain concentrated on Iran and the Strait of Hormuz rather than opening a new theater against the Yemeni group.
Pakistan, bound to Saudi Arabia through a defense pact and with troops deployed near the Saudi-Yemeni border, has proven an unreliable partner in this effort. Islamabad’s reluctance stems from its own vulnerability: Pakistan depends on energy shipments transiting the Strait of Hormuz and Red Sea, making officials there deeply wary of antagonizing Iran. Pakistani military leadership has emphasized diplomatic de-escalation in recent communications with Iranian Foreign Minister Abbas Araqchi. A Pakistani government official told Reuters that Islamabad is deliberately maintaining low visibility in the Saudi-Houthi conflict because “Pakistan’s own stakes are high” and the country does not want to damage its relationship with Iran.
The GCC states themselves harbor significant reservations about any arrangement that might implicitly recognize Iranian control over the Hormuz passage. Yet the diplomatic calculus appears to be shifting. According to sources who spoke with the Financial Times, Iran and Oman are seeking GCC endorsement of their shipping management proposal as leverage to pressure Washington into lifting its blockade on Iranian ports. The GCC, for its part, wants assurances that any agreement would be temporary and would guarantee reliable passage for their own vessels.
An Iran-Oman accord would not fully restore normal traffic through the strait. Tehran has explicitly demanded that the U.S. first honor the terms of a ceasefire agreement reached in June. The diplomatic path forward remains narrow, constrained by competing demands and the unwillingness of key players to make concessions that might appear to reward Iranian aggression. Whether Monday’s ministerial meeting produces anything more than a framework for further talks will be the first real test of whether this opening holds.