A Saudi Arabia-Iran deal will boost security and trade

Significance

Relations between Riyadh and Tehran have long been characterised by political tension, and episodes of proxy military confrontation. Ties reached their nadir in 2016 when diplomatic relations were severed, and have continued to be fraught.

Impacts

• Bilateral trade and investment deals are unlikely to feature in any agreement in the short-to-medium term.
• A successful deal is likely to result in further overt and covert action by Israel against Iran.
• If negotiations fail, further geopolitical uncertainty will most likely destabilise the global oil market and regional trade.