Today, Iran is an increasingly important actor in the highly contested and competitive geopolitical landscape. Its moves are radically upending regional order and undermining global economic power. Iran already has hypersonic capabilities and deep ties to Russia. This triangulation is enabling Russia to become a true great power as it looks to exploit rising tensions between the United States and Israel. Adding further complexity, Iran is the linchpin of China’s energy lifeline. Furthermore, it gets ensnared in a macro-level global-scale volatility arbitrage, with the Fed as the last resort liquidity provider in this case, the U.S.
Iran’s importance extends beyond its military capabilities. Of course, the nation’s most important role comes when these two worlds—the petrodollar order and multipolar defiance—collide. It constitutes a strategic leverage point for China between the East and the West. So too would the repercussions of any conflict with Iran, which could reverberate well beyond the Middle East. Observers note that while some perceive Iran merely as a militia armed with AK-47s, it is, in fact, a well-equipped and organized military power.
In past months, tensions have sharply increased between Iran and Israel, with Israel carrying out probing operations, assassinations and airstrikes in Iranian territory. These steps are indicative of the broader approach Israel has been taking to counter Iranian influence while trusting more and more on U.S. military power. Without such support, analysts contend that Israel does not have the capabilities to fight a long war against Iran.
The narrative surrounding the conflict is incredibly important. It usually features front page serious allegations of Iranian plots to kill former President Trump and other U.S. officials. This narrative engineering creates a popular justification for military action. It further helps set the stage for how diplomats in capitals around the world will view Iran’s intentions on the global stage. These types of allegations are used in the wider geopolitical game, wherein the stakes are dangerously high.
The risk of escalation into conflict with Iran has grave implications. Experts warn that American military involvement risks getting out of control. That would change the continuing war in Ukraine from a regional conflict—bad as that is—to an international disaster. The consequences might even extend to the nation’s financial markets. This would lead to dramatic spikes in gold and crude oil prices, creating severe shocks to economies worldwide.
Iran’s response to any U.S. or Israeli attack could lead to market chaos, further destabilizing an already volatile global economic landscape. As if that weren’t enough, a nuclear Tehran makes the political calculus much more perilous. It darkly suggests an appalling disregard for the value of American lives and interests.
Iran’s ties to major world powers like Russia and China further muddy the waters. Combined with Russia’s continued military support for Iran and China’s dependence on Iranian energy exports, any Iranian–American military tussle threatens to provoke greater turmoil across the region. This widening interconnectedness only serves to augment Iran’s position as a true critical choke-point player in the world global geopolitics.
Third, it has deep and abiding economic interests closely tied to the stability of the Middle East. A military conflict with Iran would severely jeopardize these vital U.S. interests and likely spark systemic shocks in U.S. financial markets. Unsurprisingly, investors are already on edge at the prospect of how hot China-U.S. tensions could disrupt oil supplies and push prices.
As these new dynamics develop, the international community is observing with concern. The balance is just as precarious for military action and diplomatic negotiations. Each choice has ramifications that affect both regional stability and the long-term wellbeing of the global economy.