The China-brokered Saudi-Iran deal has big repercussions for the Middle East — and the U.S.
A man in Tehran holds a local newspaper reporting on its front page the China-brokered deal between Iran and Saudi Arabia to restore ties, signed in Beijing the previous day, on March, 11 2023.
Atta Kenare | Afp | Getty Images
DUBAI, United Arab Emirates — When arch-rivals Saudi Arabia and Iran announced they were restoring diplomatic relations, much of the world was stunned — not only because of the breakthrough after years of mutual animosity, suspected attacks and espionage between the two countries, but because of who brokered the deal: China.
Taking up a specific role that the U.S. could not have fulfilled, this was Beijing’s first foray into Middle East mediation, an area that for the past few decades was largely occupied by Washington.
As tensions simmer between the world’s two largest economies and U.S. policymakers sound the alarm over competition and security concerns with China, what does Beijing’s ascendance in the region mean for the Middle East — and for U.S. interests?
“Many are breathing a sigh of relief [with] today’s official Iran-Saudi agreement,” Bader al-Saif, an assistant professor of history at Khalifa University in Abu Dhabi, wrote on Twitter after the news was announced. “All 3 parties to the deal can claim victory, but Saudis are arguably the biggest winner,” he contended.
From the Saudi perspective, normalization with Iran — a country that’s long been seen by the Saudi monarchy as one of its greatest security threats — removes obstacles in its reform and economic transformation journey, according to Joseph Westphal, a former U.S. ambassador to the kingdom.
“I think the leadership there believes that this is a very important moment for Saudi Arabia as it emerges … as a real leader in the world on many issues,” Westphal told CNBC’s Dan Murphy on Tuesday. “A constant struggle with Iran delays that and impedes the progress that they made.”
“Obviously, the United States could not have made this agreement possible because we don’t have a relationship with Iran,” the ambassador added. “I think China was a good partner to do this. I think they’re the right people,” he said, noting that China invests heavily in Saudi Arabia and is its top trading partner.
“So I think this is a very good thing all the way around.”
Hopes for de-escalation in areas like Yemen, where Saudi Arabia has carried out a brutal war against Iran-backed Houthi rebels since 2015, are now more realistic than before, analysts say. Risks to shipping and oil supplies in the region may be reduced, and trade and investment between the countries could add to growth.
Reduced risk of direct military confrontation
At the very least, improved communication will reduce risks of confrontation, said Torbjorn Soltvedt, principal Middle East and North Africa analyst at Verisk Maplecroft, who called the deal “a much needed pressure valve amid heightened regional tensions.”
Still, it’s a mistake to assume that everything is solved.
“Due to the ongoing shadow war between Iran and Israel – and sporadic Iran-backed attacks against shipping and energy infrastructure throughout the region – the risk of escalation due to miscalculation is still uncomfortably high,” he said.
In the past few years, the region has seen numerous attacks, particularly on Saudi and Emirati ships and energy infrastructure, which Riyadh and Washington blamed on Iran. Tehran rejects the accusations.
“Riyadh and Tehran will remain adversaries with competing visions for the region,” Soltvedt stressed. “But improved channels for communication have the potential to reduce the risk of a direct military confrontation between the two states.”
Iran is also now enriching uranium at its highest level ever, and is believed to be just months away from nuclear bomb-making capability. Rapprochement between Riyadh and Tehran may mean little if the latter’s nuclear program isn’t addressed.
Has Washington been snubbed?
The White House’s seeming reluctance to praise China was hard not to notice.
“We support any effort to de-escalate tensions in the region. We think it’s in our interests,” National Security Council spokesman John Kirby said of the news on Friday, adding that the Biden administration had made similar efforts in that direction.
But when asked about Beijing’s role, Kirby replied: “This is not about China and I’m not going to characterize here whatever China’s role is.”
Chinese President, Xi Jinping (L) is welcomed by Crown Prince of Saudi Arabia Mohammed bin Salman Al Saud (R) at the Palace of Yamamah in Riyadh, Saudi Arabia on December 8, 2022.
Anadolu Agency | Anadolu Agency | Getty Images
The news signaled the growing influence of China in the Arab region. And not just economically, as it already exports an immense amount of goods to the Middle East and is the largest importer of Saudi oil – but politically. Leaders of Saudi Arabia and the UAE have made concerted efforts to diversify their foreign relations and move away from being overly dependent on the U.S., as successive American administrations treat the Middle East as less of a priority.
“I think it demonstrates that U.S.’s influence and credibility in that region has diminished and that there is a new sort of international regional alignment taking place, which has empowered and given both Russia and China newfound influence and status,” Aaron David Miller, a senior fellow at the Carnegie Endowment for International Peace and former Middle East policy advisor for the State Department, told NBC News.
He called the fact that China brokered the deal “stunning.”
US Marine Corps General Kenneth F. McKenzie Jr. (C, behind), commander of the US Central Command (CENTCOM) and Lieutenant General Fahd bin Turki bin Abdulaziz al-Saud (front), commander of the Saudi-led coalition forces in Yemen, are shown reportedly Iranian weapons seized by Saudi forces from Yemen’s Huthi rebels, during his visit to a military base in al-Kharj in central Saudi Arabia on July 18, 2019.
Fayez Nureldine | AFP | Getty Images
Still, there seems to be a consensus that in terms of military power and security alliances in the region, U.S. influence is in no danger.
“No Chinese mediation — or any diplomatic involvement — will threaten US primacy in the region. All states, Iran included, know that,” Khalifa University’s Al-Saif said. The U.S.-Saudi Arabia security partnership spans nearly three-quarters of a century, and Saudi Arabia’s military arsenal is overwhelmingly supplied and maintained by the U.S. and American military personnel.
Neither KSA nor Iran will change overnight.
Bader Al-Saif
Assistant professor of history, Khalifa University
In any case, China’s gain doesn’t have to mean a loss for the U.S., many believe.
“This shouldn’t be a zero sum game for the US. It can serve US interests: Iran nuclear deal, Yemen, Lebanon for starters can benefit from the agreement,” Al-Saif said.
“A quick move should follow on these files [because] the agreement may not last long,” he added. “Might as well reap benefits while it lasts.”
Will the deal hold?
It’s yet to be seen whether the agreement between the two Middle Eastern powers – and the mutual goodwill expressed in its wake – will last.
Many regional watchers are skeptical.
“Iran’s opting for engagement here should not be misinterpreted as a de-escalation,” Behnam ben Taleblu, senior fellow at the Foundation for Defense of Democracies, told CNBC. “Tehran is capitalizing on deeper Chinese enmeshment in Persian Gulf trade as well as increased Saudi hedging of the pro-American order in the region.”
“There was zero political cost to the Islamic Republic to this agreement, whereas the mere optics and politics of it, let alone the substance, are in Iran’s favor,” he said, stressing his doubt that Iran will stop meddling in regional conflicts and other countries via proxies and militant activity.
Ben Taleblu also argued that Iran’s enmity with Israel played a role in its calculations as “Tehran is trying to show that it beat Jerusalem to Riyadh, and is trying to push back and break out of the diplomatic isolation it felt due to the Abraham Accords” when the UAE and Bahrain normalized relations with Israel.
For al-Saif, there is “certainly hope for the agreement to live on” and lead to the prosperity that people of both countries deserve. “But,” he said, “neither KSA nor Iran will change overnight.”
Elon Musk, who already suggested Tesla invest in xAI, is now setting the stage for the public company under his control to grossly overpay for xAI, a private company under his control that just absorbed Twitter (X).
Anyone invested in a mutual fund that owns Tesla shares could be about to bail out Musk and his billionaire friends.
At $44 billion, Musk knew he was overpaying for Twitter and tried to back out of the deal.
Within a year of Musk taking Twitter private, Fidelity Investments, which invested in Musk’s Twitter acquisition, revalued its investment as being down 65% from its purchase price.
A year later, in October 2024, Fidelity valued Twitter, X by now, at just $10 billion.
That’s not surprising since Musk had Twitter take on $12 billion in debt as part of the take-private deal, and revenue fell by roughly half under his leadership.
To take Twitter private, Musk personally financed the deal with $25 billion of his own and his existing stake in Twitter, $12 billion in debt, and about $7 billion in investment from his friends.
As of October, most of that equity was gone, but Musk wasn’t about to let a loss slide on his record.
In 2023, he launched xAI, a private company under his control that develops AI products. Tesla investors are suing him for breach of fiduciary duty and resource tunneling over the founding of xAI since he had previously stated that Tesla would be a big player in AI and simultaneously threatened not to build AI products at Tesla if he didn’t get more control of the company, but let’s put that aside for now.
When raising money for xAI in 2023, Axios reported on how Musk might use the AI company as a “plan B to save Twitter” and Musk responded:
“I have never lost money for those who invest in me and I am not starting now.”
Who are these people who invested in Twitter with Musk? There’s a long list, but two of the biggest investors are Prince Alwaleed bin Talal, a Saudi Arabian billionaire and head of Kingdom Holding Company, and Larry Ellison, billionaire co-founder of Oracle. Both are close friends of Musk.
VC firms Andreessen Horowitz and Sequoia Capital, Qatar’s sovereign wealth fund, the highly controversial crypto exchange Binance, and the previously mentioned Fidelity Investments have also invested in the deal.
By the end of 2024, those people were basically writing down 80% of their investment in Twitter, as per Fidelity.
However, a few months later, in March 2025, X was somehow valued back at $44 billion as part of a “so-called secondary deal.” Some took this information as news that X had turned around, but many were skeptical that the valuation could have gone from $10 billion to $44 billion in just 5 months.
Sure enough, we quickly learned that the new valuation had little to do with improved financials at X and was instead based on Musk pushing for xAI to buy X at $45 billion through an all-stock acquisition. A company’s valuation is only what someone is willing to pay for it and Musk was willing for xAI to “pay” $45 billion.
In late March, Musk announced that xAI had acquired X in a deal valuing xAI at $80 billion and X at $45 billion, while xAI would take on X’s $12 billion debt.
The world’s richest man was not shy about highlighting the controversial self-dealing here:
It’s worth noting that xAI had raised only $12 billion at a $40 billion valuation with virtually no revenue as of December 2024, and now it’s a $125 billion company, based entirely on Musk’s valuation, with $12 billion in debt.
How does Tesla plays into this?
Musk has promised Tesla shareholders that the Twitter acquisition would be good for the company. That was after he sold tens of billions of dollars worth of Tesla stocks to buy Twitter – sending Tesla’s stock crashing.
Tesla shareholders haven’t really seen a return on that yet unless you count a brief surge in stock price after Trump was elected, with the help of Musk and X, but the stock has since erased all those gains since Trump came into office.
Now, xAI is the plan B.
Last summer, Musk suggested that Tesla invests $5 billion in xAI, but that was before the company acquired X. Musk will need shareholder’s approval for a deal between xAI and Tesla, which would happen at Tesla’s shareholders meeting – generally held in June.
Now, Tesla’s CEO, who has been complaining about his eroding control of Tesla after selling shares to buy Twitter, has greatly inflated the value of xAI through this acquisition of X ahead of the potential investment.
Musk has also discussed Tesla integrating Grok, xAI’s large language model, into its products, specifically its electric vehicles.
A post on X this weekend suggested that this might be happening soon:
ChatGPT, OpenAI’s LLM, has already been integrated in many vehicles, including from the Volkswagen Group, Peugeot, and Mercedes-Benz.
Electrek’s Take
The grift never stops. As I have been saying for years, Musk is not equipped to be an executive of a public company, and this is just the latest example.
If all these entities were private, and he was taking his affluent private investor friends on a ride, I wouldn’t have any problem with this, but Tesla is a public company included in many ETFs and mutual funds. Many people own Tesla stocks without even knowing.
But as Musk said himself, he doesn’t let people who invested in him lose money. Does that include Tesla investors?
I don’t think it does anymore.
There’s an argument to be made that Tesla shareholders should already own Musk’s stake in xAI. That’s what the breach of fiduciary duty lawsuit is about. Musk said that Tesla was “a world leader in AI’ and said that AI products would be critical to the company’s future.
Then, he starts a private AI company and threaten Tesla shareholders that he will not build AI products at Tesla if he doesn’t get more than 25% control over the company. That’s a clear breach of fiduciary duties to Tesla shareholders as the CEO of Tesla, but it will likely take years to solve this through courts.
In the meantime, Musk is pushing for Tesla to invest in xAI, which is now valued at $125 billion – a number completely made up by Musk.
Grok is not a bad product, but it ranks below OpenAI’s ChatGPT and Google’S Gemini in most AI rankings. It also relies too heavily on information from X, which is far from reliable. Most experts see xAI as being way behind OpenAI and other AI companies, which are already generating significant revenue.
Now, I doubt Musk will still push for a $5 billion investment from Tesla. I don’t think that Musk will want Tesla to spend 15% of its cash position on this amid delcinign earnings and a very difficult macroeconomic situation.
I wouldn’t be surprised to see Musk pushing for Tesla to invest in xAI as part of a stock deal.
The timing would be good for Musk. Tesla’s current brand issues, lower deliveries, crashing earnings have led to a much lower share price on top of the crashing US stock market. If Tesla’s share price is lower, Musk can get more shares for his made-up valuation of xAI.
Musk likely owns more than 50% of xAI post X acquisition. A stock deal would virtually result in him getting half of the Tesla stocks that are part of the deal – boosting his stake in Tesla, which has been his goal since selling his stake to buy an overpriced Twitter.
In short, Musk sold Tesla stocks to buy an overpriced Twitter, regretted it and threatened Tesla shareholders to get more shares. Now, he might get Tesla shareholders to pay for the acquisition again at the same ridiculous valuation.
The craziest thing about all of this is that I bet Tesla shareholders are going to approve this scheme.
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Specialized has announced a voluntary recall for several of its popular Turbo e-bike models after identifying a safety issue with the chain guard that could pose a fall risk to riders. The culprit? A clothing-eating drivetrain setup that may be a bit too hungry for its own good.
The recall affects Turbo Como IGH, Turbo Como SL IGH, and Turbo Vado IGH models equipped with internal gear hubs (IGH), sold between 2021 and 2024. According to Specialized, certain chain guards on these bikes may allow loose-fitting clothing to become entrapped in the drivetrain, potentially causing crashes or falls.
The recall includes both belt-drive and chain-drive models. Models equipped with traditional rear derailleurs are not part of the recall and remain unaffected.
The issue isn’t widespread in terms of injuries — thankfully, as there have been no reports of serious harm. But as Specialized continues to grow its e-bike lineup, especially in the urban and commuter segment, it’s clear they’re taking proactive steps to ensure rider safety and confidence.
Riders of affected bikes are being advised to stop using their e-bikes immediately and schedule a free chain guard replacement with their local Specialized retailer. The fix will be installed at no cost, and Specialized is footing the bill for both parts and labor.
You can check if your model is affected by visiting Specialized’s official recall notice page, or by contacting their Rider Care team.
This recall lands in a growing category of micromobility safety updates and recalls, as more riders turn to e-bikes and scooters for daily transportation. From battery-related recalls to structural flaws, the increased adoption of electric two-wheelers has put new pressure on manufacturers to catch potential issues early.
While the vast majority of all e-bikes and e-scooters will never see a recall, the growing number of models on the road has seen an uptick in such occurrences over the last few years.
Electrek’s Take
While it’s always disappointing to see a defect, it’s encouraging to see brands like Specialized move quickly, transparently, and without passing costs to the customer.
And let’s be honest: for riders who favor flowing pants, long jackets, or any other long garment, these kinds of things can happen. My wife learned that the hard way when she lost a chunk of her kimono last year when she switched to riding her bike to work every day. Securing long, flowing clothing is just part of the safety procedure for riding bike. It’s good that Specialized is being proactive here, but I think just about any bike could see long garments getting sucked into a chain if conditions are right – or wrong.
I reviewed one of these e-bikes a few years ago and it was an incredible ride. I managed to escape with my pants intact, and I’d still ride one any day. If I owned one though, I’d probably take it in for that free chain-guard swap, though – which is just another example of a benefit of buying a bike shop e-bike as opposed to a direct-to-consumer brand. I love my D2C e-bikes, but having a bike shop help with this stuff, or even reach out to you directly during a recall, is a big plus in my book.
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Environment
U.S. crude oil falls below $60 a barrel to lowest since 2021 on tariff-fueled recession fears
A view shows disused oil pump jacks at the Airankol oil field operated by Caspiy Neft in the Atyrau Region, Kazakhstan April 2, 2025.
Pavel Mikheyev | Reuters
U.S. oil prices dropped below $60 a barrel on Sunday on fears President Donald Trump’s global tariffs would push the U.S., and maybe the world, into a recession.
Futures tied to U.S. West Texas intermediate crude fell more than 3% to $59.74 on Sunday night. The move comes after back-to-back 6% declines last week. WTI is now at the lowest since April 2021.
Worries are mounting that tariffs could lead to higher prices for businesses, which could lead to a slowdown in economic activity that would ultimately hurt demand for oil.
Oil futures, 5 years
The tariffs, which are set to take effect this week, “would likely push the U.S. and possibly global economy into recession this year,” according to JPMorgan. The firm on Thursday raised its odds of a recession this year to 60% following the tariff rollout, up from 40%.
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