The Secret Houthi-U.S. Deal That Could Push Saudi Arabia Back to Beijing

Back at the start of the U.S.’s ‘Operation Epic Fury’, OilPrice.com predicted three courses of action that Iran would take as it moved through the conflict escalation gears. First, most obviously, although apparently not to President Donald Trump’s team, was to close the Strait of Hormuz to cause oil, liquefied natural gas (LNG) and refined products prices to soar — check. Second, was to launch attacks on Saudi Arabian oil infrastructure via the Tehran-backed Yemeni Houthis to further inflate energy prices and undermine the idea that U.S. allies in the Middle East could rely on Washington to protect them from Iran — check. Third, was the blockade of the Bab el-Mandeb Strait, the other critical regional transit route for the world’s oil, LNG and refined products, to ramp up both the higher energy price- and regional insecurity-pressure still further. This last element has not yet been fully activated, but it is not far off. So, where do Iran and its Houthi protagonists go from here?

Staggeringly for many observers — not least, the Saudis — came recent news that not only had the U.S. directly refused to help the country militarily against the latest Houthi, and by extension Iranian, threats but also that Washington was in direct contact with the Houthi leaders. Confirmed by OilPrice.com through Iranian and Washington sources with close knowledge of the matter, just over a week ago Trump refused to authorise direct U.S. air strikes to halt the Houthi advance along the Red Sea coast when asked to do so by Saudi Arabia’s Crown Prince Mohammed bin Salman (MbS) in two separate telephone calls on 10 September. This was the day the Houthis completed their capture of the strategic port city of Mokha and were pushing quickly across several Red Coast targets. Trump instead sent CENTCOM Commander Admiral Brad Cooper to Riyadh for emergency intelligence-sharing coordination and has still not authorised any military assistance for the Saudis. Given Trump’s legendary long memory when it comes to grudges, perhaps the refusal was partly because MbS had persistently refused to take the telephone calls from former U.S. President Joe Biden in March 2022, when Washington desperately needed help from the Saudis to help bring spiralling oil prices down after Russia’s invasion of Ukraine, as analysed in full in my latest book. Perhaps it was due to ‘assurances’ from the Houthis that they would not attack U.S. vessels in the Bab el-Mandeb Strait. Such assurances were reiterated during the direct U.S.–Houthi negotiations that took place at the U.S. Embassy in Muscat, Oman, mediated by the Omani government, over the weekend of 12–13 September 2026, with the specific face-to-face session occurring on 13 September. “Up until then, the Saudis still thought the U.S. had its back,” a senior source who works closely with the European Union’s (E.U.) security complex exclusively told OilPrice.com last week. “After that, it [Saudi Arabia] knows it’s on its own now,” he added.

Widening the current military campaign against Saudi Arabia is certainly another of the next steps the Houthis will take, if it gets the chance, according to the Iranian source. This may come sooner rather than later, given Saudi plans — discussed again over the weekend — to form a standalone 14-country task force called the Multinational Maritime Defense Coalition (MMDC), which will also include elements of the recently formed Mecca Joint Defence Agreement (MJDA) framework analysed by OilPrice.com. The MMDC comprises MJDA countries (Saudi Arabia, Pakistan and Turkey), Egypt, Kuwait, Bahrain, Qatar, Jordan, Yemen (the anti-Houthi Presidential Leadership Council), Djibouti, Somalia, Sudan, Bangladesh, and Nigeria. The inclusion here of Djibouti may not be helpful to the Saudis because — as also examined in my latest book on the new global oil market order — Iran’s main superpower backer, China, has a vice-like grip over the country due to predatory loans connected to its ‘Belt and Road Initiative’ multi-generational power-grab project. In fact, following Chinese investment of around US$14 billion in the country (totalling over 70% of Djibouti’s debt, and making it the country’s biggest debtor), Beijing in 2017 created its first overseas military base there. Given that Chinese vessels remain largely unaffected on the orders of Iran from the current blockades on the Strait of Hormuz or the Bab el-Mandeb Strait, it appears that Djibouti’s involvement in the MMDC will just be part of a balancing act geared toward protecting Chinese economic self-interest, rather than a genuine geopolitical desire to undermine Iran’s strategic goals. Consequently, anything China does in this ‘alliance’ is likely to be confined to quietly pressuring Tehran to tell the Houthis to keep the disruptions selective.

Worse still for Saudi Arabia’s plans to quell the Houthis threat is that Beijing’s highly integrated BRI-related economic and logistics corridor runs all the way from the Horn of Africa to the wider western Indian Ocean, and into another of Riyadh’s ‘partners’ in the MJDA — Pakistan. Djibouti is not just home to a massive Chinese military base but also acts as the maritime centre for Ethiopia, with Beijing owning the US$4 billion Addis Ababa–Djibouti Railway essential for Ethiopia’s exports. To the south of Ethiopia is Kenya, which China has established as its primary commercial maritime gateway into the African continent through the building of the Mombasa Port Expansion project and the Lamu Deep-Water Port.  And northeast of Djibouti across the Arabian Sea is the crown jewel in China’s maritime choke point strategy — Pakistan’s Gwadar Port. As thoroughly detailed in my latest book, Gwadar is directly tied to the China-Pakistan Economic Corridor, officially a commercial deep-water port operated by China Overseas Ports Holding Company, but it is heavily constructed to act as a dual-use facility capable of resupplying, repairing, and docking the People’s Liberation Army Navy’s capital ships. Moreover, in each of these areas there is also ample opportunity for the Houthis to hook up with fellow like-minded Islamic extremist terrorists too, thus creating a force multiplier effect across the region. Aside from the Tehrik-e-Taliban Pakistan operating widely across that country, Al-Qaeda-affiliated extremist group Al-Shabaab is based in Somalia with a very broad reach into Djibouti, Ethiopia, Kenya, and Sudan. Looking at all of these factors, and given the strong relationship that had built up between Saudi Arabia and China in the years following the end of the 2014-2016 Oil Price War, it may well be that the key victory for the Houthis to come will be a switch back in Riyadh’s primary geopolitical alliance to China, and away from the U.S.

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