Regional escalation pathways in the U.S.-Israel-Iran war
This report provides scenario mapping of the ongoing U.S.-Israel-Iran war, analysing potential regional escalation pathways, Strait of Hormuz disruption risk and the likelihood of further attacks on Gulf energy infrastructure.
The following analysis draws on source inquiries and ongoing research conducted by our team across the region, and forms part of our broader monitoring of the Iran–Israel–U.S. conflict and its implications for global markets.
Executive Summary
- We are mid-war, not near resolution
Incentives across all actors point to a prolonged conflict, with neither Israel nor Iran seeking a quick end and the U.S. unable to exit cleanly. - Strategic misalignment is driving escalation
The U.S. wants de-escalation, Israel wants to maximise long-term damage to Iran, and Tehran is focused on regime survival and regional leverage. - Energy infrastructure is now the main battlefield
Iran is targeting Gulf energy assets as a pressure lever, while Israel has begun responding in kind. This marks a structural shift in the war. - Strait of Hormuz disruption is the most likely pathway (40%)
Continued Iranian attacks on shipping and Gulf infrastructure risk pulling the U.S. deeper into the conflict despite its desire to withdraw. - Oil market risk is asymmetric and underpriced
Limited escalation scenarios keep oil around ~$100, but severe escalation could push prices toward $200 with prolonged market dislocation. - GCC states are a critical swing factor
Gulf countries prefer de-escalation but may shift toward active involvement if energy infrastructure damage intensifies. - U.S. decision-making is the key uncertainty
Washington faces a binary choice: withdraw and accept reputational cost, or escalate further to secure maritime stability and a narrative of victory. - Worst-case scenario is systemic regional war
Full Gulf involvement combined with Iranian escalation would remove remaining guardrails, expand attacks to civilian and global infrastructure, and trigger a sustained global energy shock.
If you would like to discuss any of the findings or explore additional briefings on Iran, Gulf security dynamics or energy market risks, please feel free to contact us.
