The recent 12-week conflict involving Iran has produced a complex array of outcomes, reshaping geopolitical dynamics in the Middle East and beyond. While details of a tentative agreement between Washington and Tehran remain scarce, early analysis suggests clear winners and losers from the confrontation.
Among the principal losers is Israel, which, alongside its Gulf allies Bahrain and the United Arab Emirates (UAE), has sustained significant economic damage amid Iranian missile attacks. Tehran's blockade of the Persian Gulf has further disrupted oil exports, hitting the Gulf states hard. The UAE, which had been leading regional efforts to diversify its economy beyond hydrocarbons, now faces heightened security concerns that undermine its business and tourism sectors. The Sunni-led Gulf monarchies are reportedly eager for a negotiated settlement with Shiite Iran to restore stability.
Israel’s Prime Minister Benjamin Netanyahu is widely believed to have been instrumental in persuading U.S. President Donald Trump to launch the initial strikes against Iran, hoping to force regime change through military means. Despite the elimination of several senior figures within Iran and its proxy groups, such as Hezbollah in Lebanon and Hamas in Gaza, these organizations remain capable of mounting significant threats. Netanyahu faces political challenges ahead of Israel’s general election, as his hardline approach has so far yielded only tactical successes rather than decisive victories.
Europe and Britain are also viewed as losers in the conflict due to the resulting oil price shocks, which have contributed to rising inflation and interest rates, dampening prospects for economic growth. The crisis has exposed Europe’s military vulnerabilities and ongoing reliance on U.S. defense capabilities, despite criticism of Trump’s policies. While the geographic distance and resources of the United States might have shielded it from direct impacts, Washington’s substantial military expenditure has done little to decisively weaken Iran’s nuclear ambitions or its influence in the region. The conflict’s cost and outcome raise questions about America’s strategic gains.
On the winning side, China appears to have played a pivotal role, with President Xi Jinping and Pakistani mediators facilitating negotiations that could pave the way for a U.S. de-escalation in the Gulf. This diplomatic maneuvering positions China as a key arbiter of regional peace and could help revive global energy trade, reducing tensions without directly implicating Beijing should talks falter. Russia also benefits economically from elevated oil and gas prices and politically from strained relations between Washington and European capitals, which Moscow views with approval.
Iran itself, while economically strained and seeking an end to hostilities, may emerge with greater strategic leverage. New leadership within Tehran is perceived to be more intransigent than predecessors eliminated during the conflict. Iran’s effective control over the Strait of Hormuz, through which a significant proportion of the world’s oil passes, enhances its regional influence, posing challenges for global trade and its adversaries.
Looking ahead, the durability of any peace deal depends largely on decisions by the U.S. President. Historical parallels suggest caution, as demonstrated by the careful diplomacy following the 1962 Cuban Missile Crisis. The hope remains that Iran’s Supreme Leader, Ayatollah Khamenei Jnr, will avoid provocative triumphalism that could derail negotiations and provoke further conflict.