Saudi Arabia has publicly accused Iran of encouraging the latest Houthi military campaign against the kingdom, while acknowledging that diplomatic contacts remain active.

Speaking on October 15, Saudi Deputy Foreign Minister for Public Diplomacy Rayed Krimly revealed several significant developments.

Failed negotiations: Riyadh invited the Houthis to talks in Oman in July, but the movement declined, according to Krimly. The Saudi account has not been independently confirmed.

Iranian involvement: Krimly accused Tehran of providing weapons, training and intelligence support to the Houthis. Iran has previously rejected allegations concerning its role in the conflict.

Diplomatic contacts continue: Saudi Arabia maintains direct communication with both Iran and the Houthis, with Oman facilitating contacts.

Bab al-Mandab: Fighting over territory near the strategic waterway continues to threaten an alternative shipping route for Gulf energy exports.

OBSERVER’S ASSESSMENT: Saudi Arabia faces a difficult balance between military retaliation and diplomatic engagement.

The Houthis retain the ability to impose significant economic and security costs despite Saudi-led military operations. But their attacks on civilian infrastructure also deepen humanitarian and regional risks.

The strategic question is whether Riyadh and Sanaa can reach an agreement before the Red Sea becomes an even more dangerous extension of the wider regional war.

STRAIT OF HORMUZ | New Diplomatic Formula Emerges as Oil Shipping Costs Reach Extraordinary Levels

October 16, 2026

A possible diplomatic pathway is emerging in the confrontation between Iran and the United States, but the economic consequences of the maritime crisis continue to intensify.

Saudi diplomat Rayed Krimly disclosed on October 15 that international mediators are discussing two unresolved questions.

Hormuz negotiations: A potential arrangement would link safe commercial passage through the strait to ending the American blockade of Iranian ports. No agreement has been announced.

Nuclear negotiations: Mediators are also seeking clarity on the scope and framework of renewed US–Iran nuclear discussions.

Shipping crisis: Reuters reports that freight rates for transporting Middle Eastern oil to Asia have reached approximately $34 per barrel on affected routes.

One striking example is the supertanker Esteem Explorer, whose planned US-to-Japan voyage is expected to cost $81 million, compared with an average of $9.1 million for the same journey last year.

OBSERVER’S STRATEGIC ASSESSMENT: The confrontation is increasingly becoming a struggle over economic endurance.

Iran faces American pressure on its oil exports, while insecurity around Hormuz imposes substantial costs on global shipping and energy consumers.

The longer the confrontation continues, the more its costs spread beyond the battlefield—from oil terminals and shipping companies to factories, transport networks and household budgets worldwide.