Research & Commentary Results

The US-Israeli war against Iran has created the largest disruption to global oil and liquefied natural gas supplies in modern history. There is a tremendous amount of economic uncertainty for Gulf states to navigate, and it will reshape the way they engage with one another and with Iran, Israel, and the United States for years to come. But this war has also laid bare how urgently the United States needs to update its own approach toward the Gulf states when it comes to energy.

The economic stress points vary considerably across the Gulf. Assuming a resumption of exports by May, Kuwait, Iraq, Bahrain, and Qatar still face sharply declining revenues and contracting GDP—as much as 14 percent in Kuwait and Qatar—because of shut ins, time to restart, and lack of alternative delivery routes. After the Iranian attacks on Ras Laffan, Qatar’s economic outlook and time to recovery look much more difficult.

Gulf states — including their national oil companies and sovereign and related entities — are energy giants. They understand the risks of a prolonged threat from Iran and did not choose this war. They also recognize the risks of their geographic location, should the region endure another bout of instability and dislocation from a fragmented and collapsing neighbor.

With the Strait of Hormuz closed and oil production from Iraq’s south in free fall, Baghdad’s failure to maximize the Iraq-Turkey Pipeline is no longer a policy dispute. It is a national emergency.

The Israeli-U.S. military strikes on Iran that began on February 28 have done more than ignite a Middle Eastern war. They have sent shockwaves rolling across Asia, from the Strait of Hormuz to the Sea of Japan, exposing the brittle underpinnings of regional energy systems, straining diplomatic balancing acts, and forcing governments to make hard choices they have long deferred.

China has perfected the role of concerned onlooker as the Middle East conflict spreads across the region.

The launch of large-scale US and Israeli strikes against Iran places Beijing in a strategically uncomfortable position. This campaign is the most significant US military operation since the Iraq War, unfolding across a region central to China’s energy security and commercial ambitions.

The latest cycle of U.S.-Iran escalation has followed a familiar script: sharpened rhetoric from the United States, calibrated military signaling by Iran in the Persian Gulf, indirect diplomacy through Oman, and Israeli warnings that remain deliberately ambiguous but unmistakably real. Yet beneath this choreography lies a more consequential development inside Tehran. The current crisis is forcing Iran’s political class to reassess its central foreign-policy wager of the past decade: that deepening alignment with Russia and China would provide strategic insulation against Western coercion.

Crude oil legally sanctioned by the United States and its allies today makes up an estimated 18% of global tanker capacity, or 6-7% of total unrefined petroleum flows — shares that have been growing. Increased pressure on Russian exports and US intervention in Venezuela have further constrained Russian flows and temporarily removed Venezuela, the smallest sanctioned producer, from the market. Iranian exports, however, remain largely untouched.

China is becoming harder to ignore in the Middle East. Yet the gap between economic presence and strategic power remains wide, even as American policy swings, argues US academic John Calabrese.

The Abraham Accords have represented a remarkable shift in U.S. Middle East policy. They reframed Arab-Israeli normalization as a result of shared interests – within the Middle East and directly with the US, rather than as a byproduct of Israeli-Palestinian peace. Signed in September 2020, on the last leg of the first Trump administration, the Accords brokered by Washington normalized relations between Israel and the United Arab Emirates (UAE) and Bahrain, followed by framework agreements with Morocco and Sudan. From the American perspective, the Accords were intended to break decades of diplomatic stagnation in the Middle East in order to establish a regional framework aligned with American strategic objectives.

In November 2025, the United States sought and obtained approval for a United Nations Security Council Resolution (UNSCR 2803) endorsing the formation of a Board of Peace (BoP) and International Stabilization Force (ISF) to support the implementation of the 20-point peace plan agreed to by Israel and Hamas the previous month. The ISF’s stated role is to help secure and demilitarize the Gaza Strip, primarily by facilitating the decommissioning of weapons, protecting civilians, and training and advising burgeoning Palestinian police forces. In the intervening months, however, progress on standing up the ISF has stalled, and conflicting messaging from US officials provides more questions than answers.