Executive Summary
This report evaluates the current situation and geopolitical risks in the Middle East after ten days of the US-Israel war against Iran.
The critical consequence of the war is its influence on regional security and the energy market, further exacerbated by the perpetual closure of the Strait of Hormuz, leading to a record escalation in global energy prices.
The primary concern is the possibility of a complete cessation of regional energy supplies as opposed to a brokered truce.
Key Takeaways
- The appointment of Mojtaba Khamenei as Supreme Leader ensures IRGC-backed continuity and an existential commitment to the conflict despite the loss of the previous leadership.
- Global Brent crude prices peaked at $119.50 per barrel before settling near $90.00 after Trump’s statement about a potential short-term conclusion to military operations.
- Iranian retaliatory strikes have expanded to include energy and water infrastructure in Bahrain, Kuwait, and the UAE, threatening the basic utility security of US regional allies.
Background Information
On Saturday, 28 February 2026, Israel and the United States started a substantial aerial operation, targeting 26 Iranian provinces and senior officials, which resulted in the killing of Supreme Leader Ali Khamenei and high-ranking figures in the Iranian political and military apparatus.
The Israel Defence Forces (IDF) reported that they have neutralised approximately 75% of Iran’s static and mobile ballistic missile launchers and destroyed over 40 Iranian naval vessels, including the Shahid Soleimani-class corvette.
Tehran has retaliated for the continuous strikes by implementing a blockade of the Strait of Hormuz and executing missile and drone assaults against Israel and US bases in the Gulf Arab monarchies.
Lebanon also became involved in the conflict when Hezbollah fired rockets at Israel in response to the death of Ali Khamenei, leading to retaliatory action by the IDF. In the last days, the IDF intensified its ground and air operations in southern Lebanon to establish a security buffer zone, reportedly killing hundreds of Hezbollah operatives and a regional commander.
In parallel, amidst mass civilian evacuations and persistent rocket barrages launched by Hezbollah into Israel, Lebanese President Joseph Aoun has urged a diplomatic resolution, while the Lebanese parliament has postponed forthcoming elections because of the prevailing conflict.
On Monday, 9 March 2026, amid volatile markets and the potential for an impending oil crisis, US President Donald Trump optimistically declared the Middle East conflict to be nearing its conclusion, which subsequently led to a rally in stock indexes and a decline in oil prices, despite the absence of concrete details.
Iranian sources stated that the civilian death toll in the Islamic Republic has surpassed 1,230. This figure includes a mass casualty event at a primary school in Minab, where nearly 200 people died.
In the last days, the Assembly of Experts formally named Mojtaba Khamenei as the new Supreme Leader, a move immediately met by pledges of “complete obedience” from the Islamic Revolutionary Guard Corps (IRGC) and the country’s military forces.
Why Does It Matter?
Washington and Tel Aviv aim for a total degradation of Tehran’s nuclear and ballistic capabilities, yet the Iranian military forces’ “complete obedience” to Mojtaba Khamenei suggests a commitment to asymmetric resistance rather than capitulation.
This context creates a complicated strategic constraint for the US and Israel, as the military success of neutralising 75% of Iran’s launchers has not prevented retaliatory strikes against vital infrastructure and US military bases in the Gulf Arab monarchies. The assaults on desalination facilities and energy centres escalate a bilateral conflict into a regional survival emergency, inducing Gulf monarchies to reconcile their alliance with Washington with the imminent danger of utility system failure.
The geopolitical landscape is further exacerbated by Tel Aviv’s initiative to create a security perimeter in southern Lebanon, escalating into a full-scale ground conflict despite the Lebanese administration’s pursuit of diplomatic resolutions.
Despite a brief period of market calm attributed to Trump’s positive statement regarding the war, the global economy remains constrained by the status quo of the Strait of Hormuz blockade because of the lack of a formalised truce agreement.
Until verified hostilities cease, the potential for a complete regional energy interruption remains, imposing significant pressure on the coalition to present a decisive outcome that prevents the failure of domestic and international economic stability.
Indicators to Monitor
- Tracking whether Brent crude prices remain near the $90.00 mark or surge back toward $120.00 as a measure of market confidence in a “short-term excursion.”
- Monitoring the number of commercial transits (currently averaging 13 per day, down from 153) to assess the effectiveness of the Iranian blockade.
- Observing the movement of the IDF 91st, 210th, and 146th Divisions to see if the security belt exceeds the planned 15-kilometre depth south of the Litani River.
- Identifying potential dissent within the Assembly of Experts or the Iranian populace following the hereditary succession of Mojtaba Khamenei.
- Official confirmation of US Navy “political risk insurance” or active escorts for commercial vessels attempting to bypass the Strait of Hormuz.
Outlook
The conflict reaches a critical juncture where military dominance meets economic and political endurance.
The coalition’s extensive damage to Iran’s missile launchers and naval capabilities aligns with the US executive’s assertion of an accelerated conflict, although the shift towards a ground invasion in Lebanon implies an expansion of the operational theatre rather than a contraction.
A rapid resolution hinges on the new Iranian leadership’s choice between a negotiated truce for self-preservation or the continuation of the Strait of Hormuz blockade, which serves as Tehran’s most impactful means of disrupting the global economy.
