The U.S.-Israel war on Iran, which began in late February 2026 and escalated through March, paused with a two-week ceasefire on April 7–8. Brokered by Pakistan, this truce followed weeks of heavy fighting, U.S. and Israeli attacks on Iranian targets, Iranian missile and drone strikes on Israel and Gulf states, and severe disruption to shipping in the Strait of Hormuz.
This analysis contends that, though not primary instigators, Gulf states have become the main economic and strategic burden-bearers of the crisis, absorbing immediate disruptions and longer-term post-ceasefire risks.
Core objectives were only partly achieved. There was no regime change or mass uprising in Iran, but Iran’s military and nuclear infrastructure suffered significant losses. Meanwhile, Tehran proved the effectiveness of its asymmetric tools—drones, mines, fast-attack craft, targeted harassment—in disrupting 20% of global seaborne oil and LNG trade. Iran expanded the conflict, striking targets in Saudi Arabia, the UAE, Kuwait, and others, regionalising the crisis and raising costs for many.
With energy markets strained, Strait shipping down, and military and economic costs climbing, all parties accepted a pause. In the current two-week window (expiring April 22), no major attacks have occurred, but operations in the Strait remain limited. U.S. naval forces enforce a blockade targeting Iranian ports, and commercial traffic faces increased risks, insurance costs, and selective passage. Pakistan’s mediation in Islamabad has narrowed differences, but Iran’s nuclear issue remains unresolved.
The region now faces several plausible trajectories that will shape Middle Eastern security for years to come. These trajectories differ primarily in how risk is distributed across actors: whether it is stabilised and priced (Scenario 1), diffused through regional competition (Scenario 2), or contained within a managed but persistent equilibrium (Scenario 3).
Scenario 1: Transactional Stabilisation and Managed Risk Premium in the Strait
Given the Trump administration’s preference for pragmatic, cost-benefit deals, one likely path involves phased sanctions relief tied to verifiable Iranian restraints on proxy activity and nuclear enrichment, in exchange for commitments to refrain from disrupting commercial shipping. The United States, in return for providing maritime security guarantees and sustaining naval protection of key sea lanes, may also seek to extract a financial or strategic return from the resulting stability architecture, potentially including an indirect share of the increased shipping costs or insurance premiums associated with secured passage through the Strait.
In such a configuration, the emerging arrangement could evolve into a tacit rent-sharing mechanism, in which both Washington and Tehran derive distributive gains from the stabilisation of maritime flows, allowing each side to frame the outcome as a negotiated success domestically.
Iran, in need of reconstruction, may leverage its location to secure economic relief. Instead of a formal toll, this could manifest as a risk premium: higher insurance premiums, selective delays, or increased security costs for ships transiting the Strait. Markets and insurers would price Iran’s disruption capability into shipping costs, turning the Strait into a monetised security space. These costs fall mainly on Gulf producers, whose export dependence leaves them exposed to even minor cost hikes.
This is not uncontested. The U.S. naval presence, international demand for stable energy, and China’s reliance on Gulf imports all deter prolonged Iranian coercion. A deal reopening the Strait and maintaining monitoring could stabilise energy prices without giving Iran unchecked leverage. Implementation requires strong verification to prevent renewed pressure.
Scenario 2: Prolonged Regional Competition and Differential Gains
Such an imposed regional order will face pushback. Iran’s drone and missile strikes on its neighbours, including Qatar and Saudi Arabia, may generate lasting enmities. If formal Iranian dominance or blackmail over the Strait emerges, irreconcilable Gulf hostility towards Tehran could endure for decades.
If mistrust holds after the ceasefire, Gulf states—having faced Iranian strikes on energy assets and bases—will likely move toward security self-reliance: better missile defence, more drones and cyber capabilities, alternative pipelines, and wider partnerships.
This dynamic is undoubtedly Tel Aviv’s dream scenario. For Israel, watching its Middle Eastern neighbours systematically exhaust their economic and military capacities could be a geopolitical jackpot, especially considering its challenges in Gaza since 2023. Just as it did during the devastating Iran-Iraq War in the 1980s, Israel can comfortably watch from the sidelines without shedding its own soldiers’ blood or paying any long-term strategic price. As regional powers bleed each other dry, Israel could emerge as the ultimate victor, doing nothing, gaining relative strategic breathing room as Iranian resources and attention remain divided across multiple fronts and adversaries.
No single actor can secure total victory. Israel still faces proxy threats and potential missteps. Iran keeps asymmetric options, but at the cost of isolation and economic troubles. Gulf states may face damage and defence costs, yet prove more resilient and less dependent on external security.
This dynamic resembles past regional attrition, in which exhaustion leads to a fragmented balance rather than outright dominance.
Scenario 3: Cold Peace and the Shift to Hybrid Competition
The main driver of this pause is mutual recognition of high military costs, global economic effects, and escalation risks. Even if extended, the truce is unlikely to yield a full treaty.
The more probable medium-term outcome is a “cold peace” — a tense equilibrium below the threshold of open interstate war, but marked by persistent competition in hybrid domains. Expect intensified Gulf arms procurement, cyber operations, the proliferation of unmanned systems, and proxy manoeuvring. Iran may maintain deniable networks while facing continued pressure on its nuclear programme. Conventional large-scale clashes could become rarer, replaced by calibrated harassment, maritime incidents, and information operations.
External actors will continue to shape this environment: U.S. enforcement of red lines, Chinese economic interests pushing for stability, and regional powers hedging through new alignments.
Conclusion: Conditional Stability in a Volatile Region
As of mid-April 2026, the ceasefire is a tactical pause, not a strategic resolution. Pakistan’s mediation keeps talks alive, and while Washington and Tehran show some willingness to negotiate, big differences remain. The Strait of Hormuz once again reveals itself as both a vital energy artery and a potent tool of asymmetric pressure, underscoring its shared vulnerability—even for Iran.
Within this context, the main burden-bearers of the war are the Gulf states. Any transit fees or risk premiums in the Strait are likely to further strain Gulf economies reliant on energy exports. Even short-term stability could amount to a structural transfer of costs to the region.
This trend may shift the conflict axis from Israel–Iran toward broader Iran–Gulf tension. Increased use of asymmetric tools could expose Gulf states to more Iranian risks while easing pressure on Israel. The likely outcome is a fragmented, asymmetric regional competition—not a classic bloc confrontation.
While short-term stabilisation of energy markets may be achievable, long-term structural risks—including arms races, hybrid threats, and fragile deterrence equilibria—are likely to persist. The Middle East is entering a more complex phase of managed fragility, shaped by great-power diplomacy, regional agency, and technological transformation. As the ceasefire deadline approaches, the weeks ahead will test whether this fragile equilibrium can be sustained or gives way to renewed escalation.
