On Sunday, just days after Saudi Aramco publicized a multibillion-dollar investment in China’s petrochemical industry, Saudi Arabia and its OPEC+ partners announced a surprise cut to oil production.

Alongside the recent China-brokered agreement for Iran and Saudi Arabia to resume diplomatic ties, these developments typify an ongoing transition: America is stepping back, and China is stepping up in the Middle East.

Coming a day after Xi Jinping officially secured a third term as China’s president, the announcement of the Saudi-Iran deal had two messages.

First, China under Xi had completed its evolution from a regional to a global power.

Second, China would be a peacemaker, solving problems the United States would not or could not address.

Both messages amount to a play for leadership of the Global South, and are part and parcel of Xi’s effort to forge a new world order.

That order will see US power and influence diluted and America’s alliance network severely weakened, if not broken altogether.

There are two main justifications for the United States’ withdrawal from the Middle East.

First, over a period of decades, the United States has spilled significant blood, treasure and diplomatic resources to maintain regional stability, often with results deemed unsatisfying.

As Chinese power catapulted to new heights over the last 15 years, administrations beginning with Barack Obama’s began calling for a reorientation of US foreign policy.

Deep engagement in the Middle East was, the argument goes, no longer worth the costs; American resources could be better put to use in the Indo-Pacific.

Second, opponents of Middle East engagement claim fracking has allowed Americans to rely on North American petroleum production, and the transition to carbon-neutral energy is reducing the US reliance on fossil fuel anyway.

Therefore, the United States need not concern itself with foreign oil.

Neither of these arguments holds up.

The Middle East should be properly understood, in part, as an arena for US-China rivalry.

It is no mystery why Beijing is expanding its influence in the region.

First, oil is and will remain a crucial global commodity.

As the recent hikes in both energy and non-energy goods’ prices show, inflation in the United States is significantly dependent on political and economic developments elsewhere.

The same goes for China and US allies, all of whom love Middle Eastern oil.

In the Indo-Pacific, American allies appreciate the new attention they’re receiving from Washington but feel uneasy about the prospects for order in the Middle East.

Instability there would have serious effects on their economies.

That’s not their only worry; dominance of the Middle East by a hostile power is equally troubling.

China aims to secure maritime checkpoints, and commanding the Persian Gulf is key to its global strategy.

Iran and China are enacting a 25-year security agreement rumored to include Chinese access to naval facilities in or near the Persian Gulf.