The conflict involving Iran is evolving into a prolonged state of attrition, with no imminent regime change in Tehran and increasing uncertainty for Gulf economies. Analysts suggest that the United States and Israel's military actions against Iran, which commenced following surprise attacks on February 28, have not resulted in the anticipated structural shifts in Iran's governance. Instead, the situation appears to be settling into a drawn-out conflict.
Oil-dependent economies in the region are grappling with supply disruptions, particularly as traffic through the Strait of Hormuz has significantly decreased due to Iranian attacks on shipping and a US blockade on Iranian ports. The US military remains heavily engaged in the region, which is experiencing heightened militarization. Although the intensity of the conflict has diminished since a memorandum of understanding was signed between Washington and Tehran in June, there are no indications that the conflict will conclude soon, leading to ongoing uncertainty.
Tensions, such as those between Houthi rebels and Saudi Arabia in Yemen, are expected to escalate as the conflict continues. The influence of other powers, including India and China, remains unchanged, with China's Belt and Road Initiative already established in the Middle East and North Africa. The region is characterized by instability, where formal alliances with external powers do not ensure security.
A recent defense agreement between Turkiye, Pakistan, and Saudi Arabia, signed in Mecca, may signal the beginning of more military partnerships in the area. Sanam Vakil, director of the Middle East and North Africa Programme at Chatham House, noted that the war has accelerated existing trends, such as Gulf countries diversifying their economies and seeking broader defense partnerships beyond US security guarantees.
Israel continues to pursue its regional objectives despite not achieving a decisive victory over Iran. HA Hellyer of the Royal United Services Institute stated that the Iranian government is unlikely to fall within the next six months, suggesting that even with increased economic pressure, any potential collapse would take years.
The closure of the Strait of Hormuz and attacks on regional cities have complicated Gulf states' efforts to leverage oil revenues for economic diversification and to attract investors. Disruptions to shipments of oil and liquefied natural gas have persisted since the onset of hostilities in February.
John Sfakianakis, chief economist at the Gulf Research Center, highlighted that while oil prices have risen, inflation has also increased, creating additional economic challenges for Gulf states. As the conflict continues, many countries in the region are likely to seek ways to adapt to the ongoing turmoil and manage its repercussions.