Iran and Saudi Arabia have agreed to be friends again, re-establishing diplomatic relations Friday in a deal brokered by China. This significant shakeup ends seven years of bad blood, jolting the geopolitical alignment of the Middle East and handing Beijing a major diplomatic victory.

The U.S. has long dominated geopolitics in the region. Xi Jinping just scrambled that egg.

Iran and Saudi Arabia have tried unsuccessfully to come to terms before, but this agreement marks the first time Beijing has gotten so involved in the region's rivalries.

Iran and Saudi Arabia are major suppliers of oil to China.

The agreement was secretly banged out in Beijing between top Saudi and Iranian officials over several days, according to Iranian state media. Under the agreement released by all three countries, Iran and Saudi Arabia will reopen their embassies and missions on each other's soil within two months, and both agreed to not interfere in the internal affairs of other nations.

Ties between the two countries were severed in 2016 after the Saudi Embassy in Tehran was overrun amid protests over the execution of a prominent Shiite cleric by the Saudi government, and it's been bad blood ever since.

China has stepped up its relations with Saudi Arabia and Iran in recent years as it became a major buyer of Middle East oil – providing a crucial lifeline to sanctions-hit Iran by becoming its main crude buyer.

Put it all together and the U.S. was just handed a major L in the Middle East.

As the Wall Street Journal puts it:

China's role in the talks marks a watershed moment for Beijing's ambitions in the region, and another blow to the U.S. in a part of the world where it has waged war and spent hundreds of billions of dollars in providing security for allies. Along with Russia's intervention in the Syrian civil war, China's secret diplomacy is another sign of the U.S.'s struggle to maintain influence in the Middle East.

饿罗. That's "L" in Mandarin.