This article is about the US-Saudi nuclear cooperation agreement announced in July 2026. But the story starts elsewhere, half a century ago, when the US and Iran were good friends. As part of the Atoms for Peace programme and the US Atomic Energy Act of 1954 that authorises civilian nuclear cooperation with other states, Washington offered nuclear education and technology cooperation to Tehran, including the gift of a research reactor in 1967. The reactor was fuelled by highly enriched uranium and was used to extract plutonium. Once Iran decided to expand its nuclear programme to power reactors, it also wanted enrichment and reprocessing technologies. The US was hesitant to offer these, but it did not want to lose Tehran to another country since Shah Reza Pahlavi of Iran was negotiating with France and West Germany, too. Washington found a compromise of sorts by offering Iran eight nuclear reactors whose fuel would come from an enrichment plant built in the US but with Iranian investment. As regards reprocessing, Washington decided to offer either “external processing and storage” of spent fuel or “internal disposition and possible construction of a multilateral reprocessing plant." Pakistan was considered the other stakeholder in such a multilateral plant since Islamabad, too, was in talks with France for a reprocessing facility. Decades later, when Henry Kissinger, who was US Secretary of State at the time, was asked to explain the rationale for the offer, his response was “They were an ally country and this was a commercial transaction.” While the deal was never finalised owing to the Islamic Revolution in 1979, the US’ prioritisation of geopolitical and commercial issues was obvious. Today, Iran is being pummelled by the US (and its ally, Israel) to strip it of the very same capabilities that were once on offer from Washington.

Fifty years hence, the US yet again appears to be prioritising geopolitical and commercial considerations in its nuclear cooperation with Saudi Arabia, a long-time friend and ‘major non-NATO ally’. The bilateral agreement signed on 22 July 2026 will set Saudi Arabia on the path of a civilian nuclear programme, which the country has desired for decades. Riyadh, however, has insisted on enrichment technology which the US has resisted. Until now. Why has the US now become amenable to the Saudi demand? Does the ongoing war in West Asia have anything to do with this? What will be the repercussions of the deal for the region and beyond?

Getting to the Deal

While Saudi Arabia sits on land awash with oil and gas, nuclear energy came to its attention so it could conserve its own resources for exports. Formal talks on nuclear cooperation between Saudi Arabia and the US began in 2008 with a bilateral Memorandum of Understanding. In 2010, Saudi Arabia set up the King Abdallah Center for Atomic and Renewable Energy (KAcare) to establish a national nuclear programme. But negotiations with Washington proceeded in fits and starts, mostly stalling over American insistence on two conditions: no access to enrichment technology and acceptance of the Additional Protocol with the IAEA. Both were unacceptable to Riyadh.

Saudi intransigence on both these conditions grew with increasing insecurities in the region, especially from the Iranian nuclear programme. In 2018, the year the US pulled out of the Joint Comprehensive Plan of Action (JCPOA), Saudi Crown Prince Mohammed bin Salman (MBS) said that although his country did not want to acquire a nuclear bomb, it would “without a doubt…follow suit as soon as possible” if Iran developed one.

In October 2017, Saudi Arabia had floated a request for information to international suppliers for the construction of two nuclear reactors. It received bids from the US, Russia, China, South Korea, and France. Reportedly, the Chinese bid was up to 20 per cent cheaper than those of its competitors. Saudi Arabia, however, refrained from going ahead, mindful of its strategic relationship with the US. It chose instead to use the offer to pressure Washington into accepting domestic uranium enrichment. Under President Biden, the US stood its ground, but the geopolitical conditions changed by mid-2026. Finding himself embroiled in a war with Iran from where an escape route appears elusive, President Trump looks at Riyadh with a new relevance. The Saudis have also enhanced the lucrativeness of the nuclear deal by suggesting plans to construct 16 reactors by 2030 to generate 17 GW of electricity. Yet again, the commercial and geopolitical factors seem to be trumping other considerations. 

What’s the Big Deal about Uranium Enrichment?

Uranium enrichment is a dual-use technology, which can take uranium from low enrichment required for fuelling light water reactors, to high enrichment usable in weapons. In the 2000s, the US had come up with the idea of a ‘gold standard’ for nuclear cooperation agreements to uphold the cause of non-proliferation by enforcing the two conditions that it has insisted Saudi Arabia should accept.

This standard was first implemented and applauded in the case of the US-UAE nuclear agreement of 2009, and the US championed its global acceptance. But, in 2026, the US has chosen to undermine this in the case of the agreement with Saudi Arabia. Of course, it can technically be argued that the transfer of enrichment is not yet a given. As per the agreement, the two sides will conduct a two-year joint study to assess the commercial viability of enrichment by Riyadh. If Washington finds it justifiable, it would allow US companies to build and operate the facility as a ‘black box’ where American firms would retain ownership and operational control of the enrichment facility even on Saudi soil. But, if Washington decides otherwise, Riyadh would have to wait ten years before it could pursue enrichment independently or with another partner.

This agreement must now pass a ninety-day continuous-session review at the Congress, as per the US Atomic Energy Act. A joint resolution of disapproval in both chambers could block the deal. But if the president vetoes it, a two-thirds majority would be needed to override it—not an easy feat in a polarised polity. To add further complexity, a day after signing the agreement, President Trump tweeted that “there will be no enrichment of material” and that the deal was “totally subject” to Saudi Arabia joining the Abraham Accords. Neither of these issues had been mentioned when the heads of the respective energy departments of the two countries signed the deal. MBS has prudently stayed quiet on the tweet. Riyadh cannot find it easy to join the Accords given its position on the Gaza war. But, more importantly, MBS’ trump card may be his promise to Washington in November 2025 to invest US$ 1 trillion in the US. This leverage combines with the US desire to not let Saudi Arabia escape its sphere of influence.

While Saudi Arabia holds some good cards to manage the deal, it will certainly ruffle feathers in an already unsettled region. It is ironic that the US is at war with Iran in order to deny it the right to enrichment for fear of nuclear weapons, while simultaneously finalising a deal with its neighbour to grant it the same technology. The optics certainly do not look good.

If the US is trying to address Saudi insecurity by agreeing to terms contrary to the ‘gold standard’, it is also creating greater insecurities in the region: for Iran, for the UAE, for Israel, and others. Not only will this agreement disincentivise Iran from eschewing its own capability in a future political resolution, but could also push the UAE to invoke the protective clause in its own nuclear agreement in case another country in the region were to get an agreement on more favourable terms. For Israel, such a deal without a diplomatic rapprochement with the Saudis would raise new anxieties. Meanwhile, the agreement could push Egypt and Turkey, too, in the direction of seeking enrichment programmes as part of their extant civilian nuclear programmes. Nuclear latency, therefore, could become the name of the game in West Asia.

The situation becomes more worrisome when viewed alongside the recent Mecca Agreement between Saudi Arabia, Turkey, and Pakistan. Pakistan already possesses nuclear weapons, has a history of proliferation, and not all of its nuclear programme is under IAEA safeguards. Saudi Arabia is refusing to accept the Additional Protocol. It also has another mutual defence agreement with Pakistan, which might have a possible nuclear dimension though no official confirmations are available. With President Trump having endorsed the ‘Islamic NATO’ as a “big, bold, and important first step”, it remains to be seen how the initiative expands and what role nuclear weapons play in the alliance security arrangements.

The Lure of Nuclear Exports

Besides the geopolitical dimension, Saudi—US cooperation also has a purely commercial one. It envisages a 30-year engagement of the American nuclear industry in Saudi civilian nuclear acquisitions, thereby capturing a lucrative Saudi nuclear market. The US nuclear industry had been sluggish over the last few decades compared to Russia and China. The American move is aimed at excluding Russian and Chinese vendors.  At the recent Nuclear Non-proliferation Treaty (NPT) Review Conference in May 2026, the American delegate had declared that Trump is “unleashing the ingenuity and strength of the American nuclear industry for the benefit of the world.”

But will such an agreement benefit the world in terms of non-proliferation and the geopolitical divides it creates? It is unlikely that West Asia will feel more secure after such a deal. It is more likely that other nuclear exporters will feel less compelled to deny sensitive nuclear technologies to other states as they compete for a share of the nuclear export pie.

At a time when interest in nuclear energy as a low carbon source of electricity is on the ascendant alongside a rising interest in nuclear weapons, it is critical that nuclear suppliers fortify responsible nuclear governance, not loosen it.

Dr. Manpreet Sethi is Distinguished Fellow, CAPSS, and Senior Research Advisor, APLN.