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Oman is desperate to diversify away from its oil and gas dependency. Research by the US Energy Information Administration puts Oman’s known crude oil reserves at 5.6bn barrels. While this is only enough to rank the country 21st in the world, its economy is disproportionately dependent: oil and gas accounts for nearly half of the country’s GDP, 70% of exports and between 68% and 85% of government revenue.

“Several dozen new cities are being constructed in the Middle East, mainly to transition away from the petroleum industry to a variety of other industries, including tourism, manufacturing, education and hi-tech,” says Dr Sarah Moser, a McGill University geography professor and author of an upcoming atlas of new cities.

Duqm sits on the Arabian Sea near the Strait of Hormuz, the gateway to the Persian Gulf – and the world’s most glaring oil supply chokepoint. Nearly a fifth of the world’s oil currently flows through this passage, ever prone to disruption. If the Duqm project succeeds, the shipping industry would be able to dock at the gates of the Middle East without needing to go all the way inside.

attracted the attention of Beijing’s much heralded Maritime Silk Road. More than three-quarters of Oman’s crude oil exports go directly to China.

While Duqm was never very densely populated, around 3,000 Bedouin – mostly fishermen and semi-nomadic herders – called the area home before the bulldozers arrived. These villages have now been demolished and the Oman government has built a new, modern town for them to relocate to. The houses look as if they were copied and pasted from Muscat – bright, white buildings two storeys high with garages and ornate gateways. There is a mosque in the centre. The houses stand empty. The local Bedouin prefer their traditional way of life – and want space to keep camels.

Kuwait is the GCC state with the most vibrant political life and democratic institutions. Opposition to a union from Kuwait is largely attributable to concerns about “collective security actions” that Saudi Arabia and other Arab Gulf states could pursue to silence dissent and activism in Kuwait. Last month’s snap elections in Kuwait will bring in parliamentarians to the National Assembly from an opposition made up of liberals and Islamists whom other GCC states would not permit to hold any position of power in their own political systems. As many Kuwaitis take pride in their “half-democracy” and relative transparency and openness, the concept of a union has met its share of resistance in the country from voices across its political spectrum.

Doha has established ties with Islamist factions throughout the region and hosted many Muslim Brotherhood members — often done so at the expense of healthy relations with other GCC states. If other Arab Gulf countries such as the UAE, which designate the Muslim Brotherhood a “terrorist” group, and Qatar belong to a union, what will be the future of Sheikh Yusuf al-Qaradawi and other prominent Islamist figures who live in Doha?

Emiratis view themselves as a rival of Saudi Arabia for a dominant role in the region’s financial landscape, Abu Dhabi would not lend its support to a Riyadh-based Gulf central bank. In the UAE, where the authorities are waging a crackdown on Islamists, there has long been a belief that the Muslim Brotherhood operates in the Emirates on behalf of Saudi Arabia and Qatar for the purpose of undermining the UAE’s national sovereignty and independence.

Oman’s interest in deepening ties with Iran in commercial, diplomatic, energy and security spheres is a major factor driving Omani opposition to a union

Given the Kuwaiti and Qatari royal families’ cordial relationship with their countries’ Shiites who are loyal to the Al Sabah (Kuwait) and Al Thani (Qatar) rulers, threats of an Iranian-inspired Shiite revolution or rebellion have not provoked substantial sectarian tension in Kuwait since the end of the first Gulf war, nor has it ever done so in Qatar at any point following Ayatollah Ruhollah Khomeini’s rise to power in 1979. This outlook fundamentally contrasts with Saudi Arabia’s and Bahrain’s outlook, which is based on an understanding of Iran being a predatory state committed to toppling the Al Sauds and Al Khalifas through a violent revolution. Manama and Riyadh’s shared view of the Islamic Republic as an existential threat has closely aligned the two kingdoms and led Bahrain to maintain its strong support for a de facto Saudi-led union.

the option of perhaps one day importing Iranian gas may receive greater consideration if they remain relatively independent from Saudi Arabia in the framework of a council (not union) and their economic ills increase their interest in importing more natural gas. Yet a union would erase any realistic Kuwaiti or Emirati plans for signing gas contracts with Iran

there are grave concerns in the GCC about the US’ long-term commitment as the council’s security guarantor

Saudi Arabia accused Iran of sowing strife in its minority-Shiite communities, which have long complained of discrimination and neglect from authorities in Riyadh. A month after Nimr’s execution, the kingdom put 32 people on trial on charges of spying for Iran, including 30 Saudi Shiites. Fifteen were ultimately given death sentences.

Tensions reached new heights in 2019 after a wave of Houthi drone attacks on Saudi oil facilities, knocking out half of the kingdom’s oil output. At the time, U.S. officials said they believed the assault was launched from Iranian territory. Tehran denied involvement.

Yemen has enjoyed a rare reprieve from fighting since last April, when a United Nations-sponsored truce went into effect. Though the truce expired in October, the peace has largely held, and back-channel talks between the Houthis and the Saudis have resumed.Story continues below advertisementThese negotiations “are also a reflection of Saudi-Iranian rapprochement,” said Maysaa Shuja al-Deen, a senior researcher at the Sanaa Center for Strategic Studies.

The Yemeni Embassy in Washington responded defiantly to Friday’s announcement, tweeting that “The rogue Iranian regime is still sending lethal weapons to the terrorist Houthi militia in Yemen, and the Yemeni embassy in Tehran is still occupied.”

The Houthis, meanwhile, appeared to approve of the agreement. “The region needs the restoration of normal relations between its countries, so that the Islamic nation can recover its security lost as a result of foreign interventions,” spokesman Mohamed Abdel Salam tweeted.

Iran and Saudi Arabia had been exploring a rapprochement since 2021, participating in talks hosted by Iraq and Oman.

“Facing a dead end in nuclear negotiations with the United States, and shunned by the European Union because of its arms exports to Russia … Iran has scored a major diplomatic victory,” said Ali Alfoneh, a senior fellow at the Arab Gulf States Institute in Washington.

China’s well-publicized role in the deal was probably intended to send a message to major powers, including the United States, “that the hub for the Middle East is shifting,”

Beijing has largely avoided intervening politically in the Middle East, focusing instead on deepening economic ties. China is the largest importer of energy from the region, and “there is a lot of interest” among major players including Saudi Arabia and Iran in securing long-term access to Chinese markets

“China has truly arrived as a strategic actor in the Gulf,”