Why This Matters

• Gulf states, already navigating regional rivalries, now face economic strain and strategic dilemmas from a protracted war next door.
• The lack of regime collapse suggests the conflict may persist, deepening uncertainty for businesses, investors, and governments across the Arabian Peninsula.
• If attrition continues, the humanitarian and economic toll could escalate, drawing in more international actors and reshaping Middle Eastern alliances.

Background

The Iran-US war began six months ago, marking a major escalation in tensions that had simmered for years. Early predictions of a rapid Iranian regime change have not materialised, and the conflict has instead become a war of attrition — a grinding, prolonged military engagement with no clear end in sight. Gulf Arab states, many of which host US bases and are economically intertwined with both sides, face a difficult balancing act between supporting their American ally and managing domestic and regional risks.

Key Perspectives

United States: Seeks to degrade Iranian military capabilities and prevent nuclear breakout, but faces the challenge of a protracted war without a quick victory. Iran: Likely aims to outlast US military pressure, using attrition to test American political will and regional support. Arab Gulf states: Their interests include preserving economic stability and avoiding becoming a battleground, while managing alliances with both Washington and Tehran.

What to Watch

• Gulf economic indicators such as stock market performance, oil price volatility, and foreign investment flows.
• Any signs of regime instability or internal dissent in Iran.
• Changes in US military posture or diplomatic overtures that could signal a shift from attrition to negotiation.