High costs of the Gulf tensions rippling across the world

Renewed hostilities between the United States and Iran and Israel's continuing military campaign underscore the growing risk of a broader Middle East conflict and heightened global energy and food crises.

The latest exchanges included US strikes on Iranian military-related targets, Iran's retaliation against US interests and regional partners, and continued Israeli military operations.

It is a familiar pattern in conflicts led by the US and Israel. Ceasefires may interrupt hostilities, but without a credible political framework they fail to address the underlying causes of the conflict.

The renewed confrontation has expanded beyond the bilateral US-Iran relationship and now intersects Israel's continuing military operations, the humanitarian crisis in Gaza, the ongoing conflicts in the West Bank, heightened tensions in Lebanon, persistent unease in Syria, Jordan's delicate balancing act, Iraq's efforts to avoid being dragged in, security concerns across the Gulf and broader regional rivalries.

These are not isolated flashpoints, but form an interconnected strategic landscape in which developments in one arena quickly reverberate across the others.

Since the June ceasefire, the Benjamin Netanyahu government in Israel has reiterated its determination to maintain military pressure on Iran. With elections approaching, Netanyahu needs that strategic tension.

Israeli leaders argue that earlier operations have significantly weakened Iran's military capabilities and continued vigilance is necessary to prevent their reconstruction.

In other words, only the Obliteration Doctrine can finish the job.

This declared policy extends beyond Iran. Israeli operations have continued in Gaza, southern Lebanon and, periodically, Syria, reflecting a security doctrine that views these fronts as strategically interconnected rather than separate conflicts.

Over time, this strategy has no future. While military operations may reduce immediate threats, they also increase the probability of regional retaliation, strengthen incentives for asymmetric responses and complicate diplomatic initiatives.

In Gaza, military operations continue amid an ongoing humanitarian crisis. Along Israel's northern frontier, exchanges with Hezbollah and operations in southern Lebanon remain volatile. Meanwhile, Israeli bombardments have displaced over 20 percent of Lebanon's population.

Yet, Gaza and Lebanon are barely reported in Western media any longer. When mass atrocities become staple, they are no longer news.

Syria is another theater for strikes targeting military infrastructure associated with Iran and allied groups, with Israel's incursions into Syria's Quneitra and Daraa provinces.

In Iraq, bases housing US troops are frequently targeted by Iranian-aligned militias. Iraqi officials can only condemn the military actions on their territory, but it's the local citizens who bear the brunt of violence.

Direct military exchanges between Israel, the US and Iran have moved beyond the proxy confrontations that characterized much of the previous decade. These theaters are linked through overlapping military deployments, intelligence networks, missile capabilities, logistics corridors and alliance structures.

This regionalization also alters strategic calculations. Governments increasingly evaluate military operations not solely in terms of local objectives but also their implications for deterrence across the wider Middle East.

Paradoxically, escalation risks, which should be reduced and marginalized, have become even more pronounced.

The consequences of the renewed hostilities extend beyond the battlefield. Military expenditures continue to rise as regional governments devote additional resources to missile defense, intelligence, naval deployments and force readiness. Such expenditures inevitably compete with — and over time, crowd out — longer-term investments in infrastructure, education and economic diversification.

These economic consequences are not confined to the Middle East. Higher transportation costs, volatile energy prices and increased geopolitical uncertainty affect inflation, financial markets and growth prospects globally.

The Middle East plays an important role in global energy markets, maritime commerce and international investment flows. Consequently, even a limited disruption around the Persian Gulf and Strait of Hormuz influences shipping costs, insurance premiums and commodity prices.

Investors typically respond by increasing risk premiums while delaying investment decisions amid heightened uncertainty.

Unlike previous regional crises, the current conflict directly involves the world's principal energy choke point — the Strait of Hormuz — through which roughly one-fifth of globally traded crude oil and a significant share of liquefied natural gas exports transit. Even without a sustained closure, heightened military risks can raise insurance costs, reroute shipping and increase market volatility.

Under a contained conflict scenario, crude oil prices could remain in the range of $85 to $100 per barrel. However, a prolonged disruption could push prices toward $110 to $140. An extreme scenario involving significant interruption of Hormuz traffic could drive prices above $150, even if strategic reserves moderate the shock.

The implications extend far beyond energy. Higher fuel prices increase fertilizer production costs, transportation expenses and irrigation costs, placing additional pressure on global food systems.

Low-income food-importing countries in North Africa, sub-Saharan Africa and parts of South Asia would face renewed import inflation, deteriorating balance-of-payments positions and heightened fiscal stress.

Whether viewed through legal, humanitarian or strategic perspectives, the cumulative effect is growing pressure on the norms that have traditionally governed armed conflict. The renewed US-Iran confrontation, together with Israel's continuing regional military campaign, spreads corrosive damage across the region. As economic risks accumulate alongside humanitarian pressures, the space for negotiated political settlements is narrowing.

The author is an internationally recognized strategist and founder of the Difference Group.

The views don't necessarily reflect those of China Daily.

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