The war between Iran and the US-Israel alliance has now entered its second week. When the US and Israel mounted joint strikes on Tehran, President Donald Trump perhaps expected a swift and decisive end. He might have believed that if regime change could be attempted elsewhere, such as in Venezuela, why not in Iran. The assassination of Iranian Supreme Leader Ayatollah Ali Khamenei, along with several senior military commanders and aides, was probably expected to trigger a meltdown within Iran’s power structure. According to that calculation, the regime would collapse quickly, allowing Washington and Tel Aviv to declare victory. But things did not unfold the way Trump may have anticipated.

When the expected outcome failed to materialise, Trump kept a relatively low profile for two days. Normally outspoken and quick to react, he instead relied on pre-recorded video messages. Some reports suggested that even though he had authorised the attack alongside Israel, he was simultaneously looking for quick off-ramps to de-escalate the crisis. Those off-ramps, however, did not appear. Neither did the Iranian regime collapse nor did it lose its ability to take decisions and execute them in wartime conditions. Despite the decapitation of its top leadership, Tehran still appears to have a functioning system and a chain of command capable of sustaining resistance against joint US-Israeli military pressure. This suggests that Iran’s state structure is far more resilient than many in Washington and Tel Aviv may have assumed.

This is not the first time the Middle East has been engulfed in flames. However, few previous wars have rattled the region — and indeed the wider world — as much as the ongoing conflict. This war has the potential not only to devastate the Middle East but also to shake the foundations of the global economy.

The last time Iran came under a major attack, it responded with what appeared to be largely symbolic strikes on the largest US military base in Doha, Qatar. Those strikes were widely seen as part of a carefully choreographed effort to defuse tensions while allowing Tehran to save face after the US strikes targeted its nuclear facilities. This time, however, the Iranian drone and missile attacks targeting Gulf countries do not appear merely symbolic. Iran is confronting what it perceives as an existential threat.

Many believed successive US administrations had resisted Israeli pressure for direct confrontation with Tehran precisely because they understood the enormous risks and costs involved. Those costs are now becoming painfully evident. Fears that a full-scale Iran versus US-Israel war could engulf the entire region are no longer hypothetical. The conflict has already spilled beyond traditional battlefields. Cities such as Dubai, Doha and Abu Dhabi have long marketed themselves as safe havens for global investment, built on political stability, security and a tax-friendly environment. Over the past decade, investors from across the world – including many from volatile regions – moved their wealth and businesses to these Gulf hubs, believing that even if wars erupted elsewhere in the Middle East, this part of the region would remain insulated from the flames.

That assumption now appears dangerously fragile. By targeting its neighbours, Iran has taken a major gamble. The strategy seems clear: if Tehran is pushed toward collapse, it intends to make sure that the entire region feels the consequences. Tehran also appears to believe that by dragging the broader Gulf region — responsible for nearly half of the world’s oil supply — into the conflict, it can dramatically raise the economic cost for the US and its allies. The closure of the Strait of Hormuz has already triggered sharp spikes in global oil prices. The first shock has already been felt in countries like Pakistan. More shocks are likely in the coming days and weeks if the conflict continues. This war may not officially be labelled a world war. But if it drags on, its economic and geopolitical consequences could be comparable to one.