China Emerges as an Iran-Gulf Mediator Amid Middle East Crisis: Background and Implications
Executive Summary
Following a U.S.-Israeli airstrike on Iran in February 2026, the de facto blockade of the Strait of Hormuz paralyzed a key global oil transport route. Although a ceasefire was agreed upon with the Islamabad Memorandum of Understanding in June, the anxieties of Gulf oil-producing countries were not resolved due to a provision that could permanently restrict freedom of navigation in the strait. China, which holds the unique position of being the largest crude oil buyer from both Saudi Arabia and Iran, is filling this vacuum. Foreign Minister Wang Yi has urged both Iran and the United States to exercise restraint and return to negotiations. China is pursuing a dual-track approach of supporting Iran while simultaneously restraining escalation in Yemen, making it difficult to definitively characterize this as the formation of an anti-U.S. bloc. The South Korean government and companies should refrain from taking an early stance between the U.S. and China, manage oil supply risks separately from financial and trade risks, and adopt a strategy of engaging with China-led infrastructure reorganization as a service provider in areas such as construction, logistics, and equipment supply.
I. Situational Analysis
China Emerges as an Iran-Gulf Mediator Amid Middle East Crisis: A Situational Analysis
1. Background and Developments
A full-scale war in the Middle East began in late February 2026 after the United States and Israel launched airstrikes on Iran [9]. Iran subsequently imposed a de facto blockade on the Strait of Hormuz [9]. The number of vessels transiting the strait, through which one-fifth of the world's oil supply passes, plummeted from over 100 per day to just a few after the war began [5]. A temporary ceasefire was reached in April but soon collapsed as attacks within the strait resumed [9].
On June 17, Iran and the United States signed the Islamabad Memorandum of Understanding to end the war [8]. However, the agreement is assessed as being highly fragile [8]. SIPRI has pointed out that the wording of a key provision in the memorandum suggests a possibility that freedom of navigation in the Strait of Hormuz could be permanently restricted by Iran in the final peace treaty [8]. This raises concerns that the gateway for the Gulf region's oil exports could be placed under permanent constraints.
China has stepped into this vacuum. China holds the unique position of being the largest crude oil buyer from both Saudi Arabia and Iran [3]. This structure is eroding the traditional security and energy channels that the United States has utilized during Gulf crises [3]. China's involvement is also growing in Yemen. The Sana'a Center reported that at a December 9, 2025, meeting with Saudi and Iranian officials, Beijing reaffirmed its support for a UN-led political solution [2]. However, the same outlet noted a growing number of intelligence and geopolitical analyses suggesting that while China officially advocates for peace and non-intervention, it is providing indirect support to Houthi rebels through intermediaries such as Iran [2].
2. Current Situation
On September 16, Chinese Foreign Minister Wang Yi met with Iranian Foreign Minister Abbas Araghchi in Beijing [13][11]. The Global Times reported that at the meeting, China urged Iran and the United States to "maintain reason and exercise restraint," "return promptly to the Islamabad Memorandum of Understanding," and "rebuild the negotiation mechanism based on the agreements reached so far" [13]. The SCMP reported that while Foreign Minister Wang reaffirmed Beijing's support for Tehran, he also expressed caution against the regional tensions spreading further into Yemen [11]. Wang also called for the swift reopening of the Strait of Hormuz [11][10]. Al-Monitor interpreted this as China, a direct stakeholder exposed to oil supply threats from the strait's disruption, pressuring both Iran and the United States simultaneously [10].
Prior to this meeting, the Tehran Times reported that Minister Araghchi had strongly supported President Xi Jinping's proposal of four principles and stated that Iran was ready to deepen strategic coordination with Beijing to build a sustainable regional security framework [4]. In effect, Iran has publicly requested an expanded role for China in the Middle East's security architecture [4]. The SCMP also highlighted the timing of the meeting, which took place ahead of President Xi's visit to the United States. It coincided with a period when the Strait of Hormuz remained closed and fighting had reignited in Yemen, just as President Xi was preparing to visit the U.S. for a summit with his American counterpart next week [7].
President Xi's moves took more concrete shape during his visit to Egypt on September 1-2. The Hindu assessed this visit as a turning point in Beijing's approach to engagement in West Asia [1]. In his meeting with President Abdel Fattah el-Sisi, Xi proposed four principles for a new regional security architecture [1]. This was his first visit to Egypt in 10 years, following his speech at the Arab League in January 2016, and it coincided with the 70th anniversary of China-Egypt diplomatic relations [3][6]. According to an EAI analysis, the visit is assessed as a "structural move made at a time when U.S. pressure for secondary sanctions against Iran coincided with a six-month stalemate in the Iran war" [3]. Egypt, while receiving $1.3 billion in annual U.S. military aid, signed a phase-three agreement with China for the Suez Canal Economic Zone. EAI reads this as a signal of a "shift from a single-patron structure to a parallel U.S.-China hedging system" [6].
Previously, at the 18th BRICS Summit in New Delhi, President Xi had also mentioned China's "due role" in building peace in West Asia [12]. The Tehran Times reported that Xi presented BRICS as a key axis for de-escalating regional tensions [12]. According to this report, which cited Xinhua News Agency, Xi stated that China would play its due role alongside fellow BRICS members for peace and stability in the Middle East and the Persian Gulf region [12].
3. Key Actors and Positions
Chinais taking a dual position in this crisis. Regarding the situation in Yemen, Al-Monitor analyzed that China is simultaneously exploiting the U.S. security vacuum while also attempting to restrain the Houthi rebels [14]. While the expansion of Houthi influence near the Bab el-Mandeb Strait represents another crack in the U.S.-led Gulf security architecture from which China can gain diplomatic and economic advantages, Beijing does not want regional escalation [14]. An EAI analysis points out that China, as a "stakeholder nation that relies on the Strait of Hormuz for a significant portion of its crude oil imports," is maintaining a cautious stance despite its strategic alignment with Iran [9]. The calculation behind Foreign Minister Wang's reported request for Iran to restrain the Houthis is to avoid damaging its energy partnerships with Gulf oil-producing countries.
Iranexplicitly welcomes an expanded role for China in the region. Minister Araghchi publicly expressed support for President Xi's four principles and stated his intention to deepen strategic coordination with Beijing [4]. With negotiations with the U.S. effectively stalled since the Islamabad Memorandum of Understanding, Iran has a strong incentive to leverage China as a favorable mediator and patron.
Gulf oil-producing countriesare showing a trend of strengthening relations with China as a hedging card amid declining confidence in U.S. security commitments. Al Jazeera reported that the Qatari prime minister's visit to China was followed by visits from high-ranking officials from the UAE and Saudi Arabia, interpreting this as part of a trend of Beijing's expanding role in the Gulf region [15]. However, the same outlet also noted that China is taking the line that it "does not need to replace" the U.S. in the Gulf [15]. This suggests that its method of filling the security vacuum is not through U.S.-style military intervention but through the expansion of economic and diplomatic influence.
Egyptis pursuing a strategy of diversifying its patrons between the United States and China. EAI believes it is premature to definitively characterize Egypt's moves as a pro-China pivot. Given that Cairo itself explicitly seeks a balance with the West, this should be interpreted not as choosing a camp but as diversifying its patrons [6].
United Statesis leading the peace process through the Islamabad Memorandum of Understanding, but SIPRI has warned of the risk that its wording could result in a restriction of freedom of navigation in the Strait of Hormuz in Iran's favor [8]. President Trump has stated that he will not end the war with Iran until after the November midterm elections, leading to observations that the possibility of an early resolution to the Gulf crisis is subordinate to the U.S. domestic political calendar [5].
4. Key Issues
The first issue is the feasibility of reopening the Strait of Hormuz. An agreement between Iran and Oman on dividing control is operationally close, but it is entangled with Iran's demands for war reparations, final U.S. approval, and domestic political resistance from Iranian hardliners [9]. EAI forecasts that over the next 12 months, the most likely scenario is not a full normalization but a state of unstable, partial reopening [9].
The second issue is China's dual-track approach regarding Yemen and the Houthis. There is a contradiction between its official support for a UN-led political solution and the evidence of indirect support via Iran [2]. This highlights the gap between China's professed image as a "neutral mediator" and its actual conduct.
The third issue is whether the hedging strategies of Gulf and African nations will lead to an actual bloc realignment. The key question is the extent to which the parallel strategy seen in Egypt—expanding economic cooperation with China while maintaining U.S. security aid—will spread to other countries in the region [6][15].
The fourth issue is the sustainability of the balance China is striking between its Gulf energy partnerships and its strategic alignment with Iran. Beijing's position of trying to maintain its status as the largest crude oil buyer from both Saudi Arabia and Iran [3] is already showing signs of strain, as evidenced by its request for Houthi restraint.
II. In-Depth Analysis
China Emerges as an Iran-Gulf Mediator Amid Middle East Crisis: An In-Depth Analysis
1. Root Cause Analysis
The starting point of the current crisis was the U.S.-Israeli airstrike on Iran in late February 2026 [9]. The full-scale war triggered by this strike led to the de facto blockade of the Strait of Hormuz [9]. The number of transiting vessels dropped from over 100 per day to just a few [5]. With the route through which one-fifth of the world's oil passes paralyzed, Gulf oil-producing countries witnessed the United States' failure to swiftly resolve the situation.
The problem was not resolved even after the signing of the Islamabad Memorandum of Understanding in June. SIPRI pointed out that a key provision in the agreement could be incorporated into the final treaty in a way that perpetuates Iran's restrictions on freedom of navigation [8]. This implies that as the U.S. pursued a peace deal prioritizing its own and Israel's security interests, the separate interests of Gulf producers in stable energy exports were sidelined. China filled this gap. Foreign Minister Wang Yi urged both Iran and the U.S. to "maintain reason and exercise restraint" and "return promptly to the Islamabad Memorandum of Understanding" [13]. Al-Monitor interpreted this as China, a direct stakeholder exposed to the disruption of passage through the strait, pressuring both sides simultaneously [10].
China's intervention stems not from ideological motives but from the material interest of securing its oil supply. China is in a structural position as the largest crude oil buyer from both Saudi Arabia and Iran [3]. An EAI report noted, "China's unique position as the largest crude oil buyer from both Saudi Arabia and Iran is eroding the traditional security and energy channels that the United States has utilized during Gulf crises" [3]. It is more accurate to see this as driven primarily by the practical necessity of securing freedom of navigation as a major oil importer, rather than a strategic plan to exploit a U.S. security vacuum.
2. Structural Context
A Vacuum in the Security Architecture. The security order in the Gulf region has been maintained since the Cold War by the deployment of the U.S. fleet and its security guarantees. However, in the current war, the U.S. has prioritized bilateral negotiations with Iran and has not addressed the issue of freedom of navigation jointly with Gulf oil-producing countries [8]. The Atlantic Council has raised the need for a new approach in which the Gulf Cooperation Council (GCC) and Iran cooperate directly on the Hormuz stalemate [5]. This is a sign that Gulf producers are beginning to feel the need for alternative security channels that do not go through the United States.
China's Dual-Play Structure. A notable aspect of China's actions is its simultaneous support for Iran and caution against escalation in Yemen. The SCMP reported that Foreign Minister Wang reaffirmed support for Tehran while also expressing a cautious stance on regional tensions spreading to Yemen [11]. Al-Monitor went further, analyzing that China is diplomatically and economically exploiting the U.S. security vacuum while also trying to restrain the Houthi rebels from reckless escalation [14]. This duality is not accidental. For China, Iran is both an oil supplier and a partner in an anti-U.S. front, but the Gulf monarchies, including Saudi Arabia, the UAE, and Qatar, are far larger trade and investment partners. An Al Jazeera column pointed to the Qatari prime minister's visit to China and subsequent visits by high-level officials from the UAE and Saudi Arabia as evidence of China's expanding role in the Gulf [15]. The calculation behind China's call for restraint is that if the Houthis escalate in the Red Sea and the Bab el-Mandeb Strait, it could destabilize its energy and infrastructure partnerships with the Gulf monarchies.
Allegations of Duplicitous Involvement in Yemen. The Sana'a Center noted a growing number of intelligence and geopolitical analyses suggesting that while China officially advocates for a UN-led political solution and non-intervention, it is providing indirect support to Houthi rebels through intermediaries such as Iran [2]. If this is true, China's actions reveal a discrepancy between its official portrayal as a "mediator" and its actual interests. In other words, China may judge that maintaining Iran's regional leverage, as long as it does not destabilize the Gulf, is more advantageous for its balancing diplomacy than the complete disarmament of the Houthis.
Limitations of the Financial Structure. Iran's increased use of the yuan for payments amid the Hormuz crisis is also part of this structure. However, an EAI report characterized this as a "phenomenon born not from the competitiveness of China's financial system but from the last resort of a country excluded from the dollar settlement network" [9]. It assessed that without the necessary conditions for a reserve currency, such as open capital markets and bond market liquidity, this trend is unlikely to lead to a change in the international status of the yuan [9]. This means it would be premature to leap to conclusions about yuan hegemony or China replacing the U.S. as a security provider based on its emergence as a mediator.
3. Historical Precedents and Comparative Cases
China's current actions are an extension of the Saudi-Iran normalization agreement it brokered in Beijing in March 2023. That agreement was seen as the first instance of China acting as a diplomatic mediator between the two major rivals in the Middle East. The current attempt at Iran-Gulf mediation is distinct in that it represents an effort by China to expand its involvement beyond normalizing bilateral relations to redesigning the regional security architecture itself. The four principles President Xi Jinping presented during his visit to Egypt symbolize this expansion [1]. Iranian Foreign Minister Araghchi strongly supported this proposal, stating that Iran would deepen strategic coordination with Beijing to build a sustainable regional security framework [4]. If the 2023 mediation was a one-off diplomatic achievement, this time Iran's strategic dependence appears to have grown, as it was Iran that first publicly requested an expanded security role for China.
At the earlier BRICS summit, President Xi had also stated that China would play its "due role" in Middle East peace through the BRICS framework [12]. The Tehran Times described this as "China's due role in promoting peace in West Asia" [12]. This can be interpreted as an intention by China to elevate its own role from a bilateral mediator to a designer of regional security using multilateral platforms. However, it remains unclear whether this multilateral rhetoric will translate into actual military or security commitments. China has historically exercised extreme restraint regarding military intervention in the Middle East, and this time as well, Foreign Minister Wang's remarks have been limited to diplomatic exhortations such as "reason and restraint" and "rebuilding the negotiation mechanism" [13].
There are also points of contrast with U.S. policy toward Iran. Through the Islamabad Memorandum of Understanding, the U.S. negotiated ceasefire terms bilaterally with Iran, appearing to use the multilateral public good of freedom of navigation as leverage in bilateral talks [8]. In contrast, China is pursuing a triangular approach, urging a swift resumption of bilateral U.S.-Iran negotiations [13] while simultaneously managing its relations with Gulf oil-producing countries. This differs from the Cold War-era practice of great powers betting entirely on one side in a proxy war. Because China needs both Iran and the Gulf monarchies as oil suppliers and markets, a full-fledged alignment with either side is structurally impossible.
4. Key Variables Shaping Future Developments
Xi Jinping's U.S. Visit and U.S.-China Relations Management. The SCMP noted that the Wang-Araghchi meeting took place ahead of President Xi's visit to the United States [7]. If China assumes an overly assertive role on the Iran issue, it could complicate the agenda and atmosphere of the U.S.-China summit. How China's mediation efforts interact with other pressing issues in U.S.-China relations will be a variable in modulating the intensity of its future actions.
Implementation of the Islamabad Memorandum of Understanding. The key question is whether the provision on restricting freedom of navigation, as pointed out by SIPRI, will be incorporated into the final treaty as is, or if it will be amended due to opposition from Gulf oil-producing countries [8]. If this provision is solidified, the Strait of Hormuz will remain a permanently unstable route, and China's mediation efforts will be a temporary fix rather than a fundamental solution.
The Yemen/Houthi Variable. Al-Monitor noted that the Houthi advance near the Bab el-Mandeb Strait represents another crack in the U.S.-led Gulf security architecture [14]. If this crack widens, China will face pressure to more strongly urge Iran to restrain the Houthis in order to maintain its energy partnerships with the Gulf monarchies. Conversely, if the allegations raised by the Sana'a Center of indirect Chinese support for the Houthis are confirmed [2], China's image as a "neutral mediator" could lose credibility among these same monarchies.
Pace of Hedging by Gulf Monarchies. The key question is whether the recent series of visits to China by high-level officials from Qatar, the UAE, and Saudi Arabia are one-off events or if they will lead to a fundamental reassessment of U.S. security commitments [15]. Al Jazeera has argued that "China does not need to replace the US in the Gulf" [15], reflecting a local perspective that the Gulf monarchies seek to leverage China as a parallel partner rather than an alternative to the United States. If this balance is disrupted—that is, if the Gulf monarchies clearly tilt toward China—it could trigger a decisive shift of the U.S.-China rivalry's main axis to the Middle East.
III. Final Recommended Response Strategy
China's Rise as an Iran-Gulf Mediator Amid the Middle East Crisis: Final Recommended Response Strategy
1. Overall Assessment and Recommended Response Strategy
China's mediation between Iran and the Gulf states is not an effort to build an ideological bloc. It is a pragmatic intervention driven by the material interest of securing crude oil supplies. This approach is underpinned by China's structural position as the largest purchaser of crude oil from both Saudi Arabia and Iran [3]. The South Korean government and companies must clearly recognize this distinction. China is not attempting to expand a bloc; it is simply filling the vacuum left by the United States to safeguard its own energy security.
Uncertainty over navigation in the Strait of Hormuz is likely to persist for a considerable time. SIPRI's observation that key provisions of the Islamabad Memorandum of Understanding could move toward permanently restricting Iran's freedom of navigation should not be taken lightly [8]. This aligns with a previous EAI analysis that an unstable, partial resumption of traffic is more probable than a full return to normalcy [9]. South Korean companies should treat the risks to passage through the strait as a medium-term structural variable, not a short-term event.
At the same time, it is important to note that China is clearly drawing a line against the expansion of the war in Yemen. The SCMP report that Foreign Minister Wang Yi reaffirmed support for Tehran while cautioning against a spillover into Yemen [11], and Al-Monitor's analysis that China is attempting to deter the Houthis from escalating the conflict [14], both signal that Beijing has no intention of allowing its close ties with Iran to damage its relations with the Gulf monarchies. This also serves as a reason for South Korea to avoid over-interpreting China's mediation as an effort to form an anti-U.S. bloc.
Based on this assessment, South Korea's response principles can be outlined in three parts. First, avoid taking an early public stance aligned with either the United States or China. Maintain a position of principled reservation regarding requests to join sanctions or make security contributions [3]. Second, manage risks to crude oil supply separately from trade and financial risks. The issue of passage through the Strait of Hormuz should be treated as a physical supply chain problem, handled on a separate track from financial issues such as the expanding use of the yuan for payments [9]. Third, engage with China-led infrastructure redevelopment in the Middle East as a service provider rather than an equity partner [3][6]. As Chinese-style models combining industrial parks, technology, and finance spread—as seen in Egypt's Suez Special Economic Zone—it is more advantageous for South Korean companies, in terms of risk versus reward, to position themselves in practical areas such as construction, logistics, and equipment supply.
2. Short-, Medium-, and Long-Term Action Plan
Short-Term (Within 3 Months). The top priority should be to review the diversification of crude oil import sources. As traffic through the Strait of Hormuz remains sharply below pre-conflict levels [5], oil refiners and trading companies must preemptively review contracts to secure alternative supplies from West Africa and the Americas. Maritime insurance premiums and war risk surcharge zones should be monitored in real time, and standing channels for consulting with shipping companies on route changes should be maintained. On the diplomatic front, closely monitor the outcomes of the meeting between Wang Yi and Abbas Araghchi and the subsequent U.S.-China summit [13][7], but refrain from making public comments at the government level.
Medium-Term (6 Months to 1 Year). Track whether the Islamabad Memorandum of Understanding is formalized into a final treaty and monitor its specific provisions. If restrictions on freedom of navigation become permanent clauses [8], this will act as a structural cost factor for South Korea's shipping, shipbuilding, and energy industries. To prepare for this scenario, the Ministry of Trade, Industry and Energy and the Ministry of Oceans and Fisheries should jointly conduct logistics cost simulations for alternative routes, such as detouring around the Cape of Good Hope. Concurrently, concretely explore opportunities for South Korean companies to participate as service providers in Egypt's Suez Special Economic Zone and other China-led infrastructure projects in the Gulf region [6].
Long-Term (1 to 3 Years). Develop a scenario plan for the contingency that China solidifies its role as a de facto coordinator within the Gulf security architecture. The increasing frequency of high-level contacts with China by officials from Qatar, the UAE, and Saudi Arabia [15] indicates that the Gulf oil-producing states are moving away from a system reliant on the United States as a sole patron and are institutionalizing their hedging strategies. South Korea should also adopt a long-term policy of diversified diplomacy, maintaining separate channels with both the Gulf monarchies and Iran, rather than relying on a single patron nation.
3. Monitoring Indicators and Trigger Points
The daily number of vessels transiting the Strait of Hormuz is the most direct leading indicator. This figure has fallen from over 100 before the conflict to a small number currently [5], and its recovery to double digits would be the primary signal of a substantive normalization. The resumption of follow-up U.S.-Iran negotiations on the Islamabad Memorandum of Understanding is another key trigger. The level of risk will vary greatly depending on whether the "rebuilding of the negotiation mechanism" urged by Foreign Minister Wang Yi is actually implemented [13] or if negotiations collapse once more.
The intensity of military actions by Yemen's Houthi rebels must also be tracked separately. An expansion of the Houthi offensive near the Bab el-Mandeb Strait [14] would signal that China's deterrence efforts have reached their limits, and maritime logistics risks could spread beyond the Strait of Hormuz to the Red Sea axis. Finally, periodically review the frequency of visits to China by high-level officials from the Gulf monarchies and the content of any agreements they sign. Whether the current trend of visits by leaders from Saudi Arabia, the UAE, and Qatar [15] leads to concrete security and energy agreements will be a key indicator of the pace at which China is expanding its regional role.
4. Summary and Conclusion
China's mediation between Iran and the Gulf states is a pragmatic move to fill the security vacuum left by the United States, driven by its interests in securing crude oil supplies. It should be viewed less as a realignment of blocs and more as a product of a phase of patron diversification [3][6]. The risks in the Strait of Hormuz are unlikely to be resolved in the short term, and South Korea must establish a principle of managing risks to crude oil supply separately from trade and financial risks. It is more practical to engage in China-led infrastructure redevelopment as a service provider than as an equity partner. While refraining from taking an early public stance toward either the United States or China, South Korea needs to continuously track developments through four key indicators: traffic volume in the Strait of Hormuz, the implementation status of the memorandum of understanding, Houthi military actions, and the frequency of high-level contact between the Gulf monarchies and China.
References
[1] [The Hindu] China’s strategy amid West Asia’s security realignment
[2] [Sana'a Center] China’s Growing Role in the Yemen Conflict
[9] [EAI] The Hormuz Crisis and the Limits of the Chinese Yuan's Internationalization
[10] [Al-Monitor] China presses Iran, US to reopen Hormuz as disruptions threaten oil supply
[11] [South China Morning Post] China affirms support for Iran, but warns against Yemen spillover
[12] [Tehran Times] Xi signals China’s ‘due role’ in advancing West Asia peace via BRICS
[14] [Al-Monitor] In Yemen, China exploits US security gap while seeking to curb Houthis
[15] [Al Jazeera] China does not need to replace the US in the Gulf
[16] [Última Hora (PY)] Xi sobre la guerra en Oriente Medio: “No sirve los intereses comunes”
[17] [环球时报 (Global Times)] Intensive head-of-state diplomacy boosts China's global partnership drive
[18] [Al Jazeera] Can China play peacemaker as Iran’s foreign minister heads to Beijing?
[19] [Al-Monitor] Xi urges BRICS peace role in Middle East, courts Modi on India visit
[23] [Foreign Policy] Only China, India, and Russia Can End the Iran War
*This text is an AI translation of an original written in Korean. Some translations or nuances may be inaccurate.
This report is an in-depth analysis planned by an EAI researcher, grounded in sophisticated AI-assisted research, and finalized by the EAI researcher.
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