The strategic competition between the United States and China in the Persian Gulf has increasingly transformed the region’s geopolitical and geoeconomic configurations, generating significant implications for Iran’s diplomacy. The central research question addresses the consequences for Iranian diplomacy arising from the declining strategic salience of the Middle East in U.S. foreign policy, concurrent with China’s adoption of a strategy of “strategic hedging.” The research hypothesis posits that although the United States has shifted its strategic focus away from the Middle East toward offshore balancing and global competition with China, it continues to function as a “monitoring hegemon” by maintaining its security umbrella in the region. In contrast, China seeks to expand its regional influence primarily through economic diplomacy and the Belt and Road Initiative. Employing a descriptive–analytical approach and utilizing comparative analysis as its methodological framework, the study finds that these dynamics have placed Iranian diplomacy within a multilayered and fluid environment, compelling it to pursue a pragmatic strategy based on smart balancing and the diversification of its foreign relations.