CWA # 2065

The World This Quarter 

The Middle East (Jan–Mar 2026):

The US-Iran War, Israel-Hamas Conflict and their interconnected fallouts

Though US-Iran war was the most important regional development, during the first quarter, From Gaza to the Gulf, the region witnessed recalibrations of conflict, shifting alliances, and evolving diplomatic strategies and dilemmas.

Lakshmi Venugopal Menon 7 April 2026

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The first quarter shows that the Middle East remains central to global geopolitics. From Gaza to the Gulf, the period was marked by recalibrations of conflict, shifting alliances, and evolving diplomatic strategies and dilemmas. As regional actors and diplomats navigated through a complex and dynamic landscape mired in security concerns, economic anxieties, and hegemonic competition, six significant developments stood out between January and the first week of April 2026.

1. Failure of the Nuclear Dialogue and the US-Israel-Iran War
The rapid escalation of the war with Iran led by the US and Israel was a major development in the region during the first quarter. In early 2026, tensions surrounding Iran’s nuclear program intensified as Tehran was reportedly advancing uranium enrichment levels closer to weapons-grade thresholds, surpassing civilian-grade. The inability to revive the Joint Comprehensive Plan of Action (JCPOA) deepened the mistrust between Iran and Western powers.

Parallelly, Iran’s regional influence has expanded through allied militias located in Iraq, Syria, and Lebanon; skirmishes involving Iranian-backed groups and the US forces in Iraq increased, raising fears of a broader confrontation. Israel’s perception of Iran’s nuclear ambitions as an existential threat signalled readiness for unilateral action if need be.
In late February 2026, the conflict escalated after coordinated US-Israeli military strikes on Iran. These attacks triggered retaliatory missile and drone attacks by Iran across the Middle East, particularly over the GCC states. The war also witnessed the closure of the Strait of Hormuz, a critical global energy route. With severe disruption to global oil supplies, the risk of a broader regional collapse looms large in the second quarter. Escalation peaked when the US President Trump set a deadline for Iran to reopen the Strait of Hormuz, threatening and carrying out large-scale strikes on key infrastructure, including civilian targets.

Diplomatic efforts, led primarily by Pakistan with support from other regional actors, in early March have created a two-phase proposal—the Islamabad framework—outlining an immediate ceasefire followed by negotiations on broader issues, including sanctions relief and security guarantees. Due to the mounting economic pressure, military strain, and global calls for restraint, Iran agreed to reopen the Strait of Hormuz, while the US and Israel agreed to pause major military operations against Iran. However, this two-week ceasefire is merely a fragile pause, as the realisation that continued escalation will impose unacceptable costs on both sides.

Iran has managed to take away the potency of American military threats, as it has become clear that the US, with its firepower, cannot bring Tehran to its knees. The military option has been tested and failed. This will significantly change the dynamics in subsequent rounds of negotiations.

2. Fallouts of Iran’s strikes and the closure of the Strait of Hormuz on the Gulf States
Energy politics remained central, with Gulf oil and gas producers adapting to fluctuating global demand and price volatility. The closure of the Strait of Hormuz and Iran’s military strikes on the energy facilities in Qatar, the UAE, and Saudi Arabia have significantly impacted these states. In March 2026, Goldman Sachs warned that Gulf economies could slip into recession, shrinking by 2-5 per cent, with Qatar and Kuwait among the most vulnerable due to their dependence on the Strait of Hormuz. Qatar has also put a force majuré on all energy and gas deals for the next five years. These attacks occurred as OPEC and its allies were calibrating production levels to stabilise markets, and countries like the UAE and Qatar were simultaneously expanding investments in liquefied natural gas (LNG) and renewable energy, diversifying their energy portfolios.

3. The War in Gaza and the Reshaping of Israeli Strategy
The ongoing Gaza conflict can be considered as the third most consequential regional development during the first quarter, due to its spillover effects and the role it has played in triggering the larger US-Israel-Iran war. Since the 7 October attacks, Israel has continued military operations, although with a strategic shift – from large-scale ground incursions, they moved to targeted strikes and intelligence-led operations against Hamas. The humanitarian conditions in Gaza have further deteriorated, garnering renewed international pressure for a sustained ceasefire. Efforts by Qatar and Egypt have yielded intermittent pauses but have not led to a comprehensive agreement. This phase of the Gaza war has further witnessed the Israeli dilemma of balancing military objectives and regional diplomatic strides.

4. The return of the Red Sea as a critical flash point and Yemen’s continuing instability
In early 2026, the Red Sea returned as a critical flashpoint with continued Houthi attacks, including drone strikes and missile launches targeting vessels linked to Israel and its allies, disrupting one of the most vital maritime trade routes in the world. Consequently, a US-led naval coalition intensified patrols in the Red Sea while conducting retaliatory strikes on Houthis. Notably, Saudi Arabia and the United Arab Emirates have provided cautious support to these efforts while also taking measures to avoid full-scale escalation in Yemen. The Red Sea crisis has numerous global implications, primarily economic, due to rising shipping costs and the forced rerouting of vessels around the Cape of Good Hope.

Yemen’s peace process has been stalled with an absence of a comprehensive political settlement between the Houthis and the internationally recognized government, despite the decrease in large-scale fighting compared to previous years. The Red Sea crisis has further diminished the prospects for de-escalation in Yemen. The involvement of global powers in the region has continued to evolve, with China deepening its economic footprint through infrastructure investments, energy partnerships, and diplomatic positioning, while the US maintains a strong security presence through a selective engagement strategy.

5. Continuing humanitarian challenges and political fragility in Syria and Iraq, respectively
The situation in Syria remains fragile with political manoeuvring and humanitarian challenges. While the Syrian army retook the Al-Omar field following the withdrawal of the SDF and the transitional government reached a ceasefire agreement with the SDF, economic collapse, currency devaluation, and infrastructure deficits continued to affect daily life for millions of Syrians. Nevertheless, humanitarian agencies have warned of worsening conditions, particularly in northern Syria, where displacement and aid shortages persist. Syria thus serves as an example of the long-term consequences of protracted conflict and the complexities of post-war recovery.

In Iraq, during the first quarter, political fragility and changing militia dynamics intensified due to the sporadic attacks on the US military installations by Iran-aligned militias, thus complicating Baghdad’s balancing act between Washington and Tehran.

6. Economic and political crises in Lebanon and Jordan
Lebanon’s deepening economic and political crisis, marked by currency collapse, banking paralysis, and political deadlock, has shown little sign of resolution. While Hezbollah’s influence and ongoing tensions with Israel persist, limited international assistance has exacerbated humanitarian conditions and accelerated emigration from the country. Turkey has continued its policy of regional normalization and strategic re-engagement. 

Jordan faced mounting economic pressures and security concerns, including inflation, high public debt, spillover effects of the Gaza conflict, refugee flows, and border security.

To Conclude: The Middle East in Jan-Mar 2026
The developments and trends highlight the layered, interconnected nature of Middle Eastern geopolitics in early 2026. The region, which seems to be in transition, is experiencing fragmentation and adaptation. In the Middle East, traditional conflicts persist, but novel economic strategies, diplomacy, recalibrated conflicts, shifting alliances, external engagement, and overlapping dynamics are reshaping the region, coexisting in uneasy balance. While the US-Israel-Iran war headlines dominate, the cumulative effect of other developments will influence the region’s medium- to long-term projections. The first quarter of 2026 has forced the region to recalibrate and reassess its security and economic priorities.

About the author

Dr Lakshmi Venugopal Menon is an academic and policy researcher specializing in Gulf studies, cultural heritage trafficking, geopolitics, migration, Afghan politics and the Taliban.