The normalisation of diplomatic relations between the two Middle Eastern powerhouses is a bearish event for flat prices. The main impact is going to be seen in the Yemen war, removing some risk premium due to higher costs of insuring Saudi oil cargoes and its onshore infrastructure’s exposition to attacks. In the long run, the deal could also result in more production from Iran and Yemen. Finally, it is an essential foreign policy success for China but is yet to mark the beginning of a new era.