Since the October 7 attacks and the subsequent escalation of conflict in Gaza, the Middle East has undergone a profound transformation marked by shifting power dynamics, economic instability, and a reordering of geopolitical alliances. The long-standing network of proxies and partners maintained by Iran has suffered significant blows, although Yemen’s Houthi movement remains a potent exception to this trend.
Israel has achieved substantial military successes, eliminating key leaders from Hezbollah and Hamas, as well as Iranian Supreme Leader Ayatollah Ali Khamenei in February. Israeli forces currently occupy much of Gaza, where more than 74,000 Palestinians have been killed and large areas reduced to rubble. However, these gains have come with steep diplomatic costs. Israel faces growing international isolation, including friction with traditional allies in the United States, and prospects for further normalization agreements with Arab states appear distant in the near term.
Instead of consolidating its position, Israel has continued to strike across the region, crossing previously respected boundaries, such as the 2025 attack on Doha, Qatar. Consequently, many governments now view Israel as the primary driver of instability in the Middle East.
The United States has also seen its role as a security guarantor erode. HA Hellyer of the Royal United Services Institute noted that pre-October 7 US policy centered on integrating Israel into the region via the Abraham Accords. Israel’s response to the attacks ended that strategy, replacing it with a direct war with Iran and a period in which Tehran targeted US allies across the Gulf.
Attacks have struck critical infrastructure, including fires near Dubai airport and at Qatar’s Ras Laffan gas hub. In September, Houthis advanced along Yemen’s Red Sea coast, capturing the port of Mocha and tightening control over the Bab al-Mandeb strait—a vital global trade route already strained by disruptions in the Strait of Hormuz.
This erosion of confidence has prompted regional states to diversify their security partnerships. Hellyer highlighted initiatives like the Mecca security pact, signed in August by Saudi Arabia, Turkiye, and Pakistan, which commits signatories to treat an attack on one as an attack on all.
The region is becoming increasingly multi-aligned. Sanam Vakil of Chatham House observed that external actors such as Turkiye and China have gained leverage, with Beijing playing a role in negotiations regarding Iran as its own energy supplies face threats. Vakil described an ironic reversal in which Israel now acts as the revisionist power, while Iran appears more focused on restoring its lost status.
Despite Israel’s military dominance, Vakil cautioned that it lacks the ability to project stability, a key component of real regional power.
Economically, the conflict has created uneven burdens. While the West has buffered itself against oil shocks through emergency reserves and diversified supply sources, Gulf exporters have suffered severely. The International Monetary Fund slashed its growth forecast for Saudi Arabia from 4.5 percent to 3.1 percent and projected a contraction of 8.6 percent for Qatar. Israeli political economist Shir Hever argued that Israel’s strategic value to the US has diminished as Western reliance on Gulf oil decreases, making Israel a diplomatic liability rather than an asset in the eyes of many regional actors.
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