The Israeli strike on Iran’s consulate in Syria this week has ratcheted up tensions in the region and the threat of an outright conflict between Iran and Israel is at its highest since the war in Gaza began. A full-blown war would not only have result in a major hit to Iran’s own economy, but it would also push up oil prices and could lead to further shipping disruptions. One important point, though, is that shifting alliances within the region mean that the Gulf economies face a much lower risk of being dragged into any conflict with Iran than was the case a few years ago.
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