The Multiple Costs of the US–Iran War – From Hormuz to Europe and South Asia: The Widening Economic and Political Geography of the Conflict
Wars are decided by those who hold military power, but their costs are increasingly borne by those who have little or no voice in the decisions that start them. The US–Iran war shows this imbalance very clearly. Its economic consequences have gone far beyond the battlefield and have disrupted energy markets, trade routes, food supplies, public finances and investment in the Gulf, Europe, Africa and Asia. The most striking feature of the conflict, however, is not only the size of the damage but its very unequal distribution.
In recent weeks, the Iran-backed Houthis have fired missiles and drones deep into Saudi Arabia, striking high-profile targets, including Riyadh’s airport and Aramco’s headquarters. The attacks follow a rapid Houthi offensive in September to seize key parts of Yemen’s Red Sea coast, which Saudi-backed government forces are now trying to roll back. Fatima Abo Alasrar, an affiliated scholar at MEI and non-resident scholar at the Arab Gulf States Institute, joins hosts Alistair Taylor and Matthew Czekaj to unpack the latest phase of the conflict. They discuss what the Houthis want, Riyadh’s calculus and search for allies, and how this campaign ties into Iran’s confrontation with the United States.
Geopolitical influence over trade increasingly rests on controlling the systems that make them work. The Middle East illustrates the stakes. US ports, cable corridors, cloud facilities, artificial intelligence (AI) investments, and maritime routes connect regional economies to global commerce while exposing them to external decisions and disruptions. For the United States, the challenge is to translate technological advantage into resilient networks rather than rely on centrality that can itself become a source of vulnerability and coercion.
Iran’s New Defense Minister Is a Missile Man, Not a Military Man
Mehrdad Akhlaghi was appointed defense minister in October 2026 by Iranian President Masoud Pezeshkian. He is an unusual choice, as, unlike most of his predecessors, he does not come from a uniformed military background. And his appointment comes arguably at the most sensitive time in the history of the Islamic Republic.
Washington says it doesn’t know who runs Iran. Tehran insists its leadership is united. MEI Senior Fellow Alex Vatanka joins hosts Alistair Taylor and Matthew Czekaj to sort out where the truth lies. They look at the small circle of political and military figures now steering the war effort in Tehran: who they are, how they make decisions, and how unified they really are. They also discuss the current state of US-Iran negotiations, the role of the upcoming midterm elections in the United States, and how the Islamic Republic is preparing for a potential renewal of conflict afterward.
Crude oil is flowing out of the Gulf again, but the market is no better prepared for another disruption in the Strait of Hormuz. It has assembled a temporary system for managing one. Crude exports from the Gulf, excluding Iran, returned to pre-war levels in September, while total Gulf shipments reached 15.5 million barrels a day, more than 80% of the pre-conflict volume.
As a result of the Iran war, Turkish thinking about nuclear weapons appears to be shifting. Iran’s emergent ability to threaten regional states (and possible determination to acquire a nuclear weapon itself), growing concern about Israeli aggressiveness, doubts about US security guarantees, and greater Saudi nuclear autonomy are all pushing Ankara to consider a future nuclear option.
Hizballah: The murderers of elected Lebanese politicians, the killers of peacekeepers, the thugs of the streets they dominated because all other militias had disarmed, the agents of destruction of their own communities on behalf of foreign paymasters reigning 1,000 miles away from Beirut, the brainwashers of children into an ideology of “resistance” that only invited invasion. That’s the Hizballah that today is begging the Lebanese state to return to them the 1,000 pounds of explosives so rudely taken from them by Lebanese soldiers doing their job at a checkpoint in the Bekaa Valley.
Many of the immediate consequences of the Israeli-American war with Iran are already clear. The further emergence of drones and missiles as dominant weapons of war; the danger to the global economy from the threats to vital chokepoints such as the Strait of Hormuz and the Bab el-Mandeb; and the inadequacy of US weapons procurement, among other issues, have garnered widespread and entirely merited attention.
The Americans Are Gone. Will Iraq’s Militias Disarm?
On September 30, the US completed its military withdrawal from Iraq, ending a 12-year-long mission to combat ISIS that began in 2014. The date was also meant to be the deadline for disarming the largely Iranian-backed militias known as the Popular Mobilization Forces (PMF), but Prime Minister Ali al-Zaidi has now pushed that cutoff back to June 30, 2027. MEI Distinguished Diplomatic Fellow Amb. (ret.) Robert S. Ford joins hosts Alistair Taylor and Matthew Czekaj to discuss what the US military withdrawal means for Iraqi security and the nature of the bilateral relationship going forward. They also speak about what it will take for Baghdad to bring the PMF militias to heel, and how Iraq may navigate the post-Iran war era.
Proponents of the war with Iran have taken recent increases in crude-oil flows through the Strait of Hormuz as proof that the US strategy is finally working. President Trump is so confident in this that he recently rejected a seven-day plan, set forward by Iran’s foreign ministry, to end the war and open the strait. The United States is “winning tremendously,” Trump boasted.
The Mecca Joint Défense Agreement: A New Geometry of Middle Eastern Power?
On August 7, 2026, Saudi Arabia, Turkey, and Pakistan signed the Mecca Joint Défense Agreement, a collective-defense pact widely compared to NATO’s Article 5. This essay argues that the comparison is misleading. Mecca borrows NATO’s language of solidarity without yet possessing NATO’s institutional machinery, and the Houthi offensive against Saudi Arabia in September 2026 provided an early and revealing test of what the agreement actually means in practice. Neither Pakistan nor Turkey automatically entered the fight on Saudi Arabia’s behalf, and Washington, despite an initial reluctance to strike directly, remained indispensable through intelligence support and a major proposed F-35 sale. Drawing on realist alliance theory — Hans Morgenthau, Kenneth Waltz, Stephen Walt, Glenn Snyder, and Steven David — and on the precedent of the Central Treaty Organization (CENTO), the essay contends that the Middle East is not dividing into rival blocs but moving from hierarchy toward a looser, overlapping geometry of hedged partnerships, in which American exclusivity is eroding considerably faster than American primacy.
The Mecca Alliance Meets the Red Sea – Saudi Arabia’s New Defense Pact Faces Its First Major Test
When Saudi Arabia, Turkey and Pakistan agreed to a mutual defense pact in August, it was principally seen as a political commitment. The “Mecca alliance,” as it was dubbed, stipulated that an armed attack on one would be treated as an attack on all three, accompanied by deeper military cooperation.
This article is part of a collection of short essays written by the Fellows of the Middle East Institute to explore aspects of the ongoing war with Iran. The intent of the collection is to help readers see new and unexpected elements of the dynamics and impact of the ongoing hostilities and to think harder, deeper, and broader about the implications of the conflict.
Yemen: The Houthis’ Role in the Next Evolution of the Axis of Resistance
The outbreak of the war with Iran demonstrated the strategic value of maritime chokepoints in the Islamic Republic’s confrontation with the United States. But as Tehran’s strategy of using the Strait of Hormuz to pressure Washington seems to be backfiring, Iran is working with the Houthis to strengthen its leverage over another strategic chokepoint: the Bab el-Mandeb. The recent escalation in Yemen should be viewed within this context.
