Uncertainty over U.S.-Saudi nuclear cooperation and escalating Red Sea–Hormuz tensions

Off Leash update 24 July 2026

SAUDI ARABIA •The U.S.-Saudi nuclear deal announced Wednesday may fall apart before its Congressional critics even have a chance to oppose it. Less than 24 hours after it was signed, Pres. Trump added a new condition requiring Saudi to join the Abraham Accords - and thus normalize relations with Israel - in exchange for U.S. permission and help building a civilian nuclear program. •Diplomatic recognition of Israel has been a non-starter for Saudi's Crown Prince MBS since Israel began its war in Gaza, although MBS was cautiously open to the idea pre-2022. If Trump doesn't walk back his new condition, MBS will certainly back out of this week's deal, which was over 20 years in the making.

YEMEN •Yemen's Houthis seem to be selectively enforcing the blockade they announced on Saudi Arabian exports earlier this week. •They struck two Saudi tankers yesterday, but allowed two Chinese-owned tankers carrying Saudi oil to pass through Bab al Mandeb - though those were loaded at Saudi's Yanbu port before the Houthis announced their blockade. Several more Chinese tankers are now loading Saudi oil at Yanbu, and analysts are watching to see how the Houthis treat them. •On the one hand, China is the Houthis' second-greatest benefactor (after Iran) and supplies the Houthis with key military kit like drone components, so the Houthis will hesitate to bite the hand that feeds them. That's what happened in 2023-5, when the Houthis attacked U.S.- and Israel-linked vessels in solidarity with Hamas, but spared Chinese ships. But on the other hand, the Houthis are - as one analyst pointed out - "quite mercurial and there is no complete clarity on what the blockade means."

IRAN •Pres. Trump antagonized Iran by vowing to use frozen Iranian funds - which Tehran has desperately sought to unfreeze to pay for post-war reconstruction - to pay for damage Iran's strikes in the Strait of Hormuz cause to ships and cargo. •Trump called it "the fair and equitable thing to do," while Iran's Foreign Minister said it sent an "incendiary precedent" and issued a rival threat: "Those who celebrate or profit from such funds should remember: once governments normalise confiscation, no one’s assets are safe. Ensuing chaos will not be pretty or peaceful." •Separately, Iraq's Prime Minister Ali al-Zaidi delivered a new U.S. ceasefire proposal to Iran's leaders, who rejected it immediately. It was probably not a serious proposal, anyway: it's hard to imagine Pres. Trump would extend a real olive branch after bombing Iran nightly for nearly a fortnight and weighing whether to launch the "largest ever" U.S. military strike on Iran. •It was reportedly another temporary ceasefire that ignored the most prescient question of who keeps control of the Strait of Hormuz.