Global Power Shifts | Strategic Risk Intelligence

Mecca Pact & China: A New Power Order in the Middle East?

Global Insight Group — Sat, 26 Sep 2026 10:58:24 +0000

Iran is portrayed in much of the Western security debate as a key destabilising force in the Middle East. Yet Tehran is simultaneously being discussed as a potential participant in an emerging regional security architecture around the Mecca Pact. Meanwhile, as Washington pressures China to scale back its support for Iran, Beijing is reassuring Tehran that their strategic partnership remains intact. What appears to be a contradiction may signal a deeper shift in the Middle East power order.

Strategic Risk Intelligence Brief by Global Insight Group.
This analysis is based on the GFDD Framework™ developed by Michaela Schaaf-Hoffelner and is designed for executives, investors and strategic decision-makers.

Updated: September 26, 2026

The Mecca Pact Is Changing the Strategic Equation

The emerging defence cooperation between Saudi Arabia, Türkiye and Pakistan is increasingly being discussed as a potential nucleus of a more autonomous regional security architecture.

Caution remains necessary. The Condor Research Group notes that the framework still lacks an integrated military command, clearly defined automatic mutual-defence mechanisms and a publicly articulated nuclear component.

Politically, however, the development is significant.

Iran is particularly noteworthy. Formal Iranian accession to the Mecca Pact has not been confirmed. Nevertheless, Tehran’s potential role in a broader collective regional security framework is being discussed.

This creates a strategic paradox: Why would Iran become part of a regional security architecture when Tehran is simultaneously portrayed as a primary security threat and a supporter of non-state actors such as the Houthis?

The answer may lie in a changing security logic.

From Containment to Integration?

For decades, Gulf security has relied heavily on US security guarantees, with Iran largely treated as a power to be contained.

A more regionalised order would follow a different logic: security would no longer depend exclusively on deterring Iran, but potentially also on integrating Tehran into a regional balance of power.

Remarkably, Beijing is publicly supporting precisely this broader direction.

During a meeting with Iranian Foreign Minister Abbas Araghchi on September 16, Chinese Foreign Minister Wang Yi argued that the existing Middle East security architecture was inadequate and required reform. China supported regional countries in building a “new security architecture for the Middle East.” At the same time, Beijing continued to describe Iran as a comprehensive strategic partner and explicitly characterised its Iran policy as continuous and stable. Source: Ministry of Foreign Affairs of China.

Just days later, Xi Jinping was sitting across the table from Donald Trump.

China Between Washington and Tehran

Washington is clearly seeking to leverage China’s influence over Iran. According to the US ambassador in Beijing, Trump told Xi during their September 24 meeting that Chinese support for Iran – whether direct or indirect – was unacceptable to Washington. Source: Reuters.

Yet Beijing has so far shown no indication that it intends to abandon Tehran. Ahead of the summit, Reuters reported that expectations of Xi applying decisive pressure on Iran at Washington’s request remained limited. Source: Reuters.

This points to an intriguing strategic balancing act.

China can position itself as a potential intermediary vis-à-vis Washington without sacrificing its relationship with Iran. For Tehran, Beijing remains an important economic and diplomatic partner. At the same time, China is supporting the emergence of a more regional security architecture among the Gulf states. Wang Yi has similarly told Qatar that Beijing supports regional countries taking greater control over their own future. Source: Ministry of Foreign Affairs of China.

The Hidden Power Game

This may be precisely where China’s strategic advantage lies.

Beijing does not need to replace the United States as the Middle East’s primary security guarantor. A more autonomous regional security order could already reduce the exclusive dependence of regional powers on Washington.

At the same time, China’s relationship with Iran becomes increasingly valuable in its dealings with the United States: the more Washington needs Beijing’s influence over Tehran, the greater China’s diplomatic leverage becomes.

Iran would therefore be more than a partner. It could also become strategic bargaining capital.

The Mecca Pact, discussions about Iran’s possible integration and China’s call for a new Middle East security architecture should therefore not be viewed in isolation. They may represent different manifestations of the same underlying development: the Middle East is diversifying its security relationships.

For investors and geopolitical risk analysts, this shift matters far beyond military alliances. A changing Middle East power order could reshape influence over energy security, the Strait of Hormuz, global trade routes, defence cooperation, investment flows and geopolitical risk premiums.

The critical question may therefore no longer be whether China supports Iran or accommodates Trump.

It is this:

How much strategic leverage does Beijing gain when both sides need China?

U.S. Treasuries: Can War Offer a Way Out of the Debt Trap?

Global Insight Group — Thu, 03 Sep 2026 09:18:59 +0000

Updated: September 03, 2026

While U.S. bombs fall on Iranian targets, Washington is fighting a second war at home: against its own bond market.

U.S. government debt has surpassed $40 trillion. Long-dated Treasury securities are losing value,, yields are rising, and some of America’s most reliable foreign creditors are beginning to look for alternatives. China has been reducing its Treasury holdings for years. Now Japan is increasingly withdrawing capital from foreign bonds and reallocating it to its domestic market.

At the same time, the Iran war is driving up oil prices, inflation and U.S. government spending. Treasury Secretary Scott Bessent is already responding by expanding buybacks of long-dated government bonds.

This raises a critical question: Could the war provide Washington with a political and monetary escape route from its debt trap despite its enormous cost? Or is it accelerating the very crisis it may be intended to contain?

Are U.S. Treasuries Already in Crisis?

The United States is not yet facing a conventional sovereign default crisis. It borrows in its own currency and and can meet its obligations in nominal terms. However, markets are demanding an increasingly high price to finance American debt.

The yield on the benchmark 10-year Treasury briefly climbed to to approximately 4.81% in early September, reaching its highest level since November 2023. Thirty-year yields exceeded 5.3% in August.

Rising yields mean falling bond prices. Every new round of borrowing therefore becomes more expensive for Washington. As existing debt matures and has to be refinanced, higher market rates progressively feed into the federal government’s interest bill.

The impact does not stop in Washington. U.S. Treasuries serve as the foundation for pricing across global financial markets. When Treasury yields rise, mortgages, corporate bonds and consumer credit become more expensive. Equity markets also come under pressure because investors can earn higher returns from supposedly risk-free government debt.

The crisis is therefore not that the United States can no longer find buyers. The problem is that investors are demanding higher yields just as Washington needs to refinance and issue unprecedented volumes of debt.

Foreign Governments Are Reducing Their U.S. Treasury Holdings

There is no global fire sale of U.S. government bonds yet. Total foreign Treasury holdings actually increased from approximately $9.09 trillion in June 2025 to $9.30 trillion in June 2026.

Below that headline figure, however, the buyer base is changing.

Holdings attributed to foreign official institutions, including central banks and sovereign entities, declined by approximately $114 billion over the same period. Additional demand came primarily from private investors and international financial centres.

This is not necessarily reassuring. Official institutions often hold U.S. Treasuries for strategic reasons as part of their foreign exchange reserves. Private investors have no comparable loyalty. They buy only when the yield, liquidity and currency risk are sufficiently attractive.

China has been reducing its officially reported Treasury holdings for years. At the end of 2013, it held approximately $1.27 trillion. By June 2026, that figure had fallen to just $633 billion. China reduced its holdings by another $98 billion within the most recent 12-month period.

Other countries have also cut their exposure:

India reduced its holdings from $227 billion to $186 billion.
Brazil reduced its holdings from $215 billion to $168 billion.
Switzerland cut its holdings by approximately $16 billion.
Japan held roughly $38 billion less than it had one year earlier.

The world is not abandoning U.S. Treasuries. But long-term sovereign buyers are increasingly being replaced by return-driven private capital, and that capital is demanding a higher price to continue financing Washington. Current U.S. Treasury TIC data

Why Japan Could Become the Turning Point

Japan is the most consequential new factor in this equation. With holdings exceeding $1.1 trillion, it remains the largest foreign holder of U.S. government debt.

For decades, Japanese banks, insurers and pension funds were effectively forced to look abroad for returns. Japanese government bonds offered almost no yield, making American, European and Australian debt natural destinations for Japan’s vast pool of savings.

That model is beginning to reverse.

The yield on 10-year Japanese government bonds has moved above 3% for the first time since 1996. At the same time, high currency-hedging costs are making U.S. bonds less attractive to Japanese investors.

Japanese investors sold a net ¥3 trillion in foreign bonds between the beginning of 2026 and August 22. This amount does not consist exclusively of U.S. Treasuries. Nevertheless, the data point to a structural repatriation of capital. A survey of 82 Japanese corporate pension funds also recorded the strongest intention to increase domestic bond holdings since the survey began in 2008. Reuters

Japan does not need to liquidate its U.S. holdings overnight to affect global markets. It is enough for the largest foreign holder of Treasuries to stop absorbing additional American debt as a matter of course.

The real risk is therefore not a dramatic one-day sell-off. It is a gradual buyers’ strike.

America’s Escape Routes Are Narrowing

For U.S. Treasury prices to recover sustainably and yields to fall, the United States would need a far more favourable combination of inflation, economic growth, debt reduction and investor demand.

None of these conditions is currently secure.

Lower Inflation

The Iran war is moving inflation in the wrong direction. Higher oil and gasoline prices raise the cost of transportation, manufacturing and consumption. The Federal Reserve can suppress demand, but it cannot produce additional oil or secure the Strait of Hormuz.

In July, the Fed kept its target rate at 3.50% to 3.75%. Three members of the Federal Open Market Committee already favoured a 25-basis-point increase. The Fed explicitly cited elevated inflation and energy-related supply shocks. Federal Reserve

Lower Government Debt

This route is also effectively blocked. U.S. government debt surpassed $40 trillion only 19 months after Donald Trump returned to the White House.

The costly Iran war, tax reductions, social spending and rising interest costs are weighing on the federal budget simultaneously. The spending cuts promised during the election campaign have come nowhere close to reversing the trend. Reuters

Strong, Non-Inflationary Growth

A strong economy helps only if growth is productivity-driven, increases tax revenue and reduces debt relative to economic output. Growth alone can increase inflation and intensify the competition for capital.

Federal Reserve Chair Kevin Warsh has already warned of a growing capital constraint. The U.S. government and the major technology companies require enormous amounts of financing at the same time. Both are competing for the same marginal investment dollar.

New Buyers

If traditional foreign buyers become less willing to expand their holdings, Washington has three options: offer higher yields, create new sources of regulatory demand or intervene directly in the market.

That intervention has already begun.

Bessent’s Treasury Buybacks: Stabilisation Tool or Hidden Warning Signal?

Treasury Secretary Scott Bessent has doubled the planned size of certain long-dated Treasury buyback operations from $2 billion to $4 billion per transaction. The programme is expected to increase buybacks by at least $14 billion during the current quarter, and Bessent has indicated that the volumes could be expanded again.

Officially, the buybacks are intended to improve liquidity in older Treasury securities. The timing is nevertheless difficult to ignore: the expansion was announced after the 30-year Treasury yield reached a 19-year high. Reuters

The buybacks do not mean that no one is willing to purchase U.S. government debt. They do show, however, that the Treasury considers stress at the long end of the market serious enough to justify active intervention.

The debt itself is not eliminated. The Treasury repurchases older, long-dated bonds using available liquidity or proceeds linked to other debt issuance. The liability does not disappear. It is effectively reshuffled across the government’s funding structure.

Bessent is therefore not solving America’s debt problem. He is attempting to contain its most visible and potentially destabilising consequence: long-term borrowing costs that are placing the government, housing market and corporate sector under pressure simultaneously.

More importantly, the initial calming effect has already faded. Treasury yields resumed their rise. The market’s message to Washington is clear: $4 billion per operation does not change the underlying fiscal and inflationary fundamentals.

War as an Escape Route or an Accelerant?

At first glance, war can support U.S. Treasuries. When global investors panic, they often seek dollar liquidity and supposedly safe U.S. government bonds. A decisive American victory over Iran could also restore Washington’s military credibility and reinforce the Gulf states’ security dependence on the United States.

That outcome could strengthen the dollar-based financial order. Energy exports would continue to be priced predominantly in dollars, oil revenues would flow back into Western financial markets, and alternative BRICS settlement systems would appear less urgent.

War can also provide Washington with a political explanation for inflation, higher gasoline prices and rising deficits. Measures that might otherwise look like a bailout of the Treasury market can be presented more easily as necessary financial stabilisation during a military emergency.

Yet the same war could become an accelerant for the U.S. debt trap.

Every additional month of conflict means higher military spending. Attacks around the Strait of Hormuz add a persistent risk premium to oil prices. Higher energy costs fuel inflation, prevent interest-rate cuts and push down the value of long-dated bonds. An attempt to defend the geopolitical dollar system through military power could therefore undermine its financial foundations.

Three distinct scenarios emerge.

Scenario 1: A Rapid U.S. Victory

Iran is forced into far-reaching military or economic concessions. Conditions around the Strait of Hormuz stabilise, oil prices fall and inflationary pressure begins to ease.

The Federal Reserve regains room to manoeuvre, Treasury yields decline and U.S. government bonds become more attractive. At the same time, a visible American success reinforces the credibility of U.S. security guarantees across the Gulf.

For Washington, this would be the preferred escape route. However, military success would not automatically create a durable post-war political order. Without a stable settlement, escalation could simply be postponed.

Scenario 2: A Permanent War of Attrition

This currently appears to be the most plausible scenario. Neither Iran nor the United States achieves a decisive breakthrough. Air strikes, ceasefires, sanctions, blockades and proxy conflicts alternate without resolving the underlying confrontation.

Oil retains a permanent geopolitical risk premium. Inflation and military expenditure remain elevated. The Fed has little room to ease, while Bessent comes under growing pressure to stabilise the Treasury market. Foreign sovereign investors continue to diversify.

At the same time, other actors can exploit America’s overstretch by intensifying additional conflict zones. U.S. military assets, capital and political attention become divided across a growing number of theatres. The war of attrition is therefore fought not only militarily, but financially.

This dynamic is examined further in Ukraine and Iran: Two Fronts, One War of Attrition Against the United States.

Scenario 3: An Uncontrolled Multi-Front Shock

The Iran war escalates, critical energy or transport infrastructure suffers major damage, and additional geopolitical flashpoints intensify at the same time.

A renewed oil shock would push the United States towards stagflation: high inflation combined with weakening growth. Treasury yields could rise further, equity and property markets would come under pressure, and foreign investors would demand an even larger risk premium.

If the Federal Reserve were then forced to provide liquidity or resume bond purchases despite elevated inflation, the decisive tipping point would have been reached. Monetary policy would no longer be focused primarily on price stability. It would be protecting the government’s ability to finance itself and preventing disorder in the Treasury market.

The Iran war is therefore not a reliable escape route from America’s debt trap. It may generate short-term safe-haven demand, reinforce the dollar system and provide political justification for market intervention. The longer it continues, however, the more it drives inflation, government spending and borrowing costs.

Washington is now fighting to preserve two foundations of American power at the same time: military dominance and financial credibility.

The decisive question is no longer simply whether the United States can win this war.

It is: Who is still willing to finance it?

Ukraine and Iran: Trump’s Two-Front War of Attrition?

Global Insight Group — Mon, 17 Aug 2026 07:36:00 +0000

Updated: August 17, 2026

At first glance, the war in Ukraine and the war with Iran appear to have little in common. Russia is fighting Ukraine, while the United States is militarily confronting Iran. But once weapons consumption, production capacity and global US defense commitments are viewed together, a different picture emerges.

Both conflicts are increasingly drawing on the same US defense industrial base. While Washington is trying to replenish depleted weapons stockpiles, China remains largely outside the direct military attrition and continues to control important parts of critical global supply chains.

The key question is therefore no longer simply who can win a war militarily. It is increasingly this:

Who can sustain a prolonged conflict industrially for longer?

Ukraine and Iran are drawing on the same US weapons stockpiles

For more than four years, the Ukraine war has forced Russia and the West into an enormous cycle of weapons consumption. Artillery ammunition, air defense systems and missile interceptors have become particularly critical.

Now Ukraine is increasingly competing with a second major theater for US military resources.

The Iran war is consuming American Patriot and THAAD interceptors, precision-guided weapons and naval capacity. In early August, Reuters reported that the United States had already used virtually all available stocks of certain long-range precision weapons during the conflict with Iran. Patriot, THAAD and Tomahawk inventories have also come under severe pressure.

The direct impact on Ukraine became even clearer on August 13. Ukrainian President Volodymyr Zelenskyy said Ukraine would need roughly 5% of the US Patriot missile stockpile simply to get through the coming winter. With 10%, Ukraine could significantly strengthen its ability to intercept Russian ballistic missiles, according to Euronews.

Two wars are therefore beginning to compete for some of the same limited US weapons.

The real problem is not stockpiles but replenishment

Long wars are not decided only by how many weapons a country has in storage.

What matters is how quickly those weapons can be replaced.

This is where the limits of the US defense industrial base become strategically important.

Washington announced contracts worth more than $3 billion in early August to expand production of components for Patriot and THAAD missile interceptors. Larger production volumes are also being planned. Reuters explicitly linked the effort to weapons stockpiles depleted by the Iran conflict and the war in Ukraine.

At the same time, the United States has signaled that it could maintain its naval blockade of Iran indefinitely. Defense Secretary Pete Hegseth argued that ships and crews could be rotated to sustain the operation, according to Reuters.

Ships can be rotated.

Crews can be replaced.

Missiles that have been fired must be manufactured again.

That is where two regional wars begin to create a broader industrial war of attrition for the United States.

China does not need to fight this war itself

While Russia ties down US and European military resources in Ukraine, and Iran forces Washington to commit additional capabilities in the Middle East, China occupies a far more comfortable strategic position.

Beijing does not currently have to fire Patriot interceptors, deploy carrier groups into its own war or absorb comparable military losses.

At the same time, military cooperation between China and Russia is deepening. Reuters reported in July on previously undisclosed training of Russian troops at facilities linked to China’s People’s Liberation Army.

China can therefore watch its main strategic rival consume weapons across multiple theaters while preserving most of its own military stockpiles.

That does not prove that China, Russia and Iran are following a coordinated secret war plan. There is no credible public evidence for such a claim.

Their actions can still produce mutually reinforcing strategic effects.

Rare earths hit the US defense industrial base at a vulnerable point

This becomes particularly important when looking at rare earths, critical minerals and defense supply chains.

China has expanded export controls on rare earths and dual-use goods. In June 2026, Beijing added US companies including MP Materials and USA Rare Earth to an export-control list. Chinese dual-use goods can no longer be supplied to those companies, Reuters reported.

The problem extends far beyond individual companies.

In July, the International Energy Agency warned that Chinese export restrictions could put downstream industries outside China worth $6.5 trillion at risk. Automotive manufacturing, high technology, energy and defense are among the sectors exposed, according to Reuters.

A strategically important pattern therefore emerges:

Russia and Iran increase military consumption. China retains significant influence over parts of the supply chains needed to rebuild Western production capacity.

Investment Implications

This development points to several structural themes that may become increasingly relevant for investors. The key question is not simply which defense stocks benefit in the short term, but which companies are positioned around hard-to-replace industrial bottlenecks.

Defense technology and bottleneck components: Beyond major defense contractors, specialized suppliers may become more strategically valuable. This includes manufacturers of missile propulsion systems, sensors, radar components, power electronics, semiconductors and other components whose production capacity cannot be expanded quickly. The longer it takes to replenish Western weapons inventories, the more important these bottlenecks become.

Critical minerals, processing and recycling: China’s dominant position in rare earths and critical upstream inputs increases the strategic value of alternative supply chains. Potential beneficiaries include mining projects outside China, processing companies, permanent magnet producers and recycling specialists. For investors, the opportunity is not limited to extraction. The entire rare earth and critical minerals value chain matters.

Reshoring and defense industrial expansion: As the US and Europe seek to strengthen strategic autonomy in defense and advanced manufacturing, additional capital is likely to flow into new production capacity, automation, specialized machinery and industrial infrastructure.

China exposure as a valuation risk: At the same time, companies that depend heavily on Chinese intermediate goods, magnets or critical minerals may face greater geopolitical risk. Export controls can affect not only supply continuity, but also margins, production planning and ultimately valuation.

For investors, this means that geopolitical supply-chain resilience is becoming as important as demand growth itself. Identifying companies that control scarce capabilities, alternative supply routes or hard-to-replace industrial inputs may become increasingly important in portfolio analysis.

Is this America’s two-front war of attrition?

Chinese military thinking includes a related concept known as Systems Confrontation and System Destruction Warfare.

Rather than viewing an adversary only as a collection of military units, this approach treats it as a complex system of command, communications, logistics, production and supply. The objective is to reduce the overall system’s ability to function effectively. The RAND Corporation describes systems confrontation as an important element of modern PLA operational thinking.

That raises a different question about China’s strategic position.

The most important question may not be when China will attack Taiwan.

It may be:

Why should China start a direct war while Russia and Iran are already tying down US resources and Beijing can continue strengthening its own military and industrial position?

The Ukraine war and the Iran war are not proven elements of a coordinated two-front strategy against the United States.

But together they generate exactly the kind of pressure associated with prolonged attrition: Washington must consume weapons, rebuild stockpiles and defend several strategic theaters at the same time.

The next phase of great-power competition may therefore be decided less by who possesses the most advanced weapons than by who can replace them fastest.

Iran War: How the West Is Fighting While Losing Its Dominance

Global Insight Group — Sun, 09 Aug 2026 12:20:29 +0000

Updated: August 09, 2026

The Iran war is usually framed in military terms: strikes, missiles, negotiations, and the question of when the Strait of Hormuz will fully reopen. But beneath this visible layer, a much larger shift may be taking place.

At first glance, the individual developments appear disconnected. Iran remains strategically capable despite massive attacks. Saudi Arabia, Türkiye and Pakistan are building their own defence architecture. Egypt could join. Iran and Oman are negotiating new rules for Hormuz. At the same time, regional chokepoints, Asian energy markets and alternative security structures are gaining strategic importance.

The central hypothesis of this analysis is therefore: The West is carrying a significant share of the military burden, while the region is beginning to organise its future power, security and trade architecture increasingly on its own terms.

1. Iran War 2026: Why Tehran Remains a Regional Power Despite the Attacks

Iran has suffered severe military damage. Yet Tehran has neither been reliably disarmed nor removed from the regional balance of power. Instead of pursuing Iran’s complete neutralisation, key Gulf states are once again pushing for negotiations.

In early August, Iran explicitly warned Saudi Arabia and other Gulf states that further attacks could trigger Iranian retaliation against oil, electricity and water infrastructure. Riyadh subsequently urged Washington once again towards negotiations. Reuters

This caution becomes even more significant when viewed alongside the nuclear developments of recent years.

The IAEA’s current information gap did not begin with the present war. Since 23 February 2021, Iran has no longer implemented the Additional Protocol, depriving the IAEA of important additional verification capabilities. IAEA

Monitoring was restricted further in 2022. By 2023, the IAEA was still able to inspect certain facilities, but lacked access to data from some surveillance equipment. In September 2023, Iran also withdrew the accreditation of several of the agency’s most experienced inspectors. IAEA and IAEA

None of this proves that Iran possesses a nuclear weapon. It does mean, however, that neighbouring states have had to plan for years under growing uncertainty about Iran’s actual strategic capabilities.

This is where the first connection emerges. The decisive shift may be that regional powers no longer assume Iran can eventually be fully disarmed or permanently contained through Western military power.

That changes the strategic objective.

The question is no longer necessarily how to exclude Iran from the regional order. The question becomes how much counterweight is required to coexist with a permanently powerful Iran without allowing Tehran to dominate that order.

In this interpretation, Iran does not need to defeat every neighbouring state. It only needs to demonstrate that no sustainable regional security architecture can be built without taking Iranian interests into account.

That is a very different form of power.

2. Saudi Arabia, Türkiye and Pakistan: A New Regional Security Architecture Emerges

On 7 August 2026, Saudi Arabia, Türkiye and Pakistan signed the Mecca Joint Defence Agreement. An attack on one of the three countries is, in principle, considered an attack on all. Turkish Foreign Minister Hakan Fidan explicitly compared the mechanism to NATO’s Article 5.

The agreement also foresees regular political consultations and a permanent secretariat in Saudi Arabia. Egypt could join at a later stage. Reuters

The roots of this structure, however, go back much further.

Saudi Arabia and Türkiye agreed to deepen cooperation on defence capabilities, the defence industry, research and development as early as July 2023. Saudi Press Agency

The first trilateral Saudi-Turkish-Pakistani defence meeting took place in Riyadh in August 2023. At their second meeting in January 2024, the three states explicitly discussed pooling intellectual, technical, financial and human resources in order to become more independent in defence. Anadolu Agency

The timing is striking. While transparency over Iran’s nuclear programme had been deteriorating progressively since 2021, the construction of a new regional defence architecture became publicly visible by 2023.

Its composition is equally important.

Pakistan is a nuclear-armed state. Türkiye has one of NATO’s largest armed forces and remains firmly inside the alliance. Saudi Arabia contributes financial, energy and regional power.

Yet Ankara explicitly states that the pact is not directed against Iran. Associated Press

This creates the second connection. Saudi Arabia may be pursuing a dual strategy.

On one side, it is building military counterweight. On the other, it is keeping Iran diplomatically close.

That is not necessarily contradictory. It is strategic hedging.

Riyadh does not have to trust Tehran, nor does it have to defeat it. It needs enough deterrent power to prevent Iran from dominating the regional order, while maintaining sufficient diplomatic access to prevent confrontation from becoming uncontrollable.

Türkiye makes this development even more significant.

Ankara already benefits from NATO’s collective defence guarantee. Yet it is simultaneously helping to create a second, regional Article 5-style structure outside NATO.

That suggests that even one of NATO’s most important military members no longer intends to organise all of its Middle Eastern security interests exclusively through a Western-led architecture.

If Egypt joins, another layer is added. The alliance would then include a major military power that also controls the Suez Canal, one of the world’s most important trade corridors.

The emerging structure could therefore be less about forming a conventional anti-Iran bloc and more about building sufficient regional weight to negotiate with Iran from a position of balance.

3. Strait of Hormuz: From Maritime Chokepoint to Institutional Power

The decisive change at Hormuz is not simply that fewer ships are passing through.

The more important question is who will determine the conditions of passage in the future.

Iran and Oman are currently negotiating a new mechanism for the Strait of Hormuz. One proposal under discussion would give Iran control over inbound shipping traffic. Controls over outbound traffic and potential transit fees remain contested.

According to Reuters, Iran has demanded fees equivalent to five to seven percent of cargo value, while Oman has proposed a lower model. The international shipping industry considers the structure currently under discussion difficult to implement. Reuters

Yet the fact that such terms are being negotiated at all is strategically significant.

A US official stated on 7 August that Washington expected an agreement between Iran and Oman soon. Only after an agreement guaranteeing commercial traffic would the United States consider lifting its blockade of Iranian ports. Reuters

For decades, the operating assumption around Hormuz was that freedom of international navigation would ultimately be protected by Western, particularly American, naval power.

That logic may now be changing.

This is where the third connection becomes visible. Iran may be attempting to convert military leverage into institutional power.

A missile creates temporary impact. A permanent system of control, authorisation, fees or veto rights creates political and economic leverage that can persist for years.

If Iran emerges from the war with any recognised role in determining the rules of Hormuz, that could ultimately be more strategically significant than an individual battlefield success.

The world’s most important energy chokepoint would no longer operate solely under the assumption of Western-guaranteed free passage. Access would increasingly become a matter of regional negotiation.

Iran would then have succeeded in transforming geography into political authority.

And that would represent a genuine redistribution of economic power.

4. Hormuz, Bab el-Mandeb and Suez: Chokepoints Are Becoming Part of a Regional Security System

Hormuz can increasingly no longer be analysed in isolation.

When the Strait becomes unavailable or unreliable, Saudi Arabia and other producers attempt to shift energy exports through pipelines and terminals on the Red Sea.

But the risk does not disappear.

It simply moves to the next chokepoint.

Bab el-Mandeb has been under pressure from Houthi attacks for years. Saudi export infrastructure on the Red Sea is also becoming increasingly exposed. Saudi Arabia is therefore building a multinational maritime defence structure in parallel.

Türkiye, Pakistan and Egypt are among the states involved in discussions over stronger regional protection of the Red Sea. Maritime security is also becoming part of the broader regional defence cooperation. Reuters

The geographical logic is straightforward.

A vessel bypassing Hormuz through alternative Saudi export infrastructure enters the Red Sea system. Traffic heading from the Red Sea towards Europe then depends heavily on Suez.

A disruption therefore does not simply disappear because an alternative route exists. It moves downstream to the next strategic bottleneck.

This chain reaction is already visible in the economic consequences. The Strait of Hormuz matters not only because of the volume of oil passing through it, but because alternative export capacity cannot fully compensate for a prolonged disruption. Schaaf Media

This creates the fourth connection. A state or group of actors does not need to exercise absolute control over every chokepoint to gain strategic power.

The ability to influence the availability, cost, insurability or political accessibility of several critical corridors can create disproportionate leverage over energy markets, freight rates and global supply chains.

A canal does not have to be physically closed.

It can become economically dysfunctional because security risks increase insurance premiums, shipping companies withdraw capacity, or political approval becomes uncertain.

At the same time, Saudi Arabia, Türkiye, Pakistan and potentially Egypt are strengthening their security relationships.

This creates a remarkable geographical concentration.

Iran and Oman sit on Hormuz. Saudi Arabia connects the Gulf with the Red Sea. Egypt controls Suez. Türkiye controls the Bosporus and Dardanelles, another strategic gateway linking the Black Sea with the Mediterranean.

This does not prove the existence of a coordinated “chokepoint alliance”.

But it does demonstrate something strategically important: an extraordinary share of the routes connecting Europe, Asia and Middle Eastern energy markets runs through or alongside states that are simultaneously seeking greater strategic autonomy from the West.

The underlying power shift may therefore be larger than the Iran war itself.

5. While Washington Fights, Economic Power Is Shifting East

This security transformation is occurring alongside a second long-term shift.

Asia has become increasingly important to the Gulf states economically.

Saudi Arabia now sells significantly more oil to China than to the United States. At the same time, alternative currencies, bilateral settlement mechanisms and reduced dependence on the US dollar are becoming increasingly important themes in global energy trade.

The Iran war reinforces this trend because sanctions, payment risks and geopolitical fragmentation encourage governments and companies to develop alternative financial and trade channels.

A sudden collapse of the petrodollar is therefore not required.

The more important development would be a gradual erosion of its exclusivity.

The long-term relationship between energy, geopolitical power and de-dollarisation has already been examined in previous analysis. Schaaf Media

China does not need to lead the Iran war militarily in order to benefit strategically from a changing regional order.

As Gulf energy exports become increasingly oriented towards Asia and regional states build security structures of their own, complete political dependence on Washington becomes less necessary.

This is where the fifth and most important connection closes the loop.

The United States can remain the strongest military power and still lose institutional power.

Washington is carrying enormous costs for military deployments, missile defence, naval operations and regional security. Yet the outcome of the war could be an order in which Iran acquires stronger chokepoint leverage, Saudi Arabia, Türkiye and Pakistan operate their own defence structure, Egypt potentially joins, and China becomes increasingly important economically.

That would make the Iran war strategically paradoxical.

The West would carry a substantial share of the military burden while other states build the structures that remain after the conflict.

This would not constitute a conventional American military defeat.

It would represent a shift in systemic power.

Washington could continue to present itself publicly as mediator, security guarantor and military leader. Beneath that visible layer, however, a new regional order could be emerging in which the United States no longer automatically determines the rules governing security, energy flows and strategic access.

The West could fight the war and still lose the post-war order.

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Nine Indicators to Watch: How to Test the Power-Shift Hypothesis

This analysis is a hypothesis. That makes it testable. The following nine indicators will show whether the underlying power shift is actually taking place.

Iran remains strategically capable. Tehran is not fully disarmed and retains sufficient military, nuclear-threshold or asymmetric capabilities to remain a permanent regional power.
Saudi Arabia continues to favour containment over the destruction of Iran. Riyadh repeatedly restrains or opposes a permanent US-Israeli strategy aimed at fully neutralising Tehran and instead pushes for negotiated arrangements.
The new defence pact expands. Egypt joining would be particularly significant because it would add both substantial military power and the Suez corridor to the emerging structure.
The pact does not become an explicit anti-Iran alliance. Despite Iranian threats, Tehran remains outside the formal enemy definition. Future consultation or cooperation mechanisms involving Iran would be especially significant.
Hormuz does not return completely to the previous status quo. Iran secures some form of institutionalised influence, control, approval mechanism, fee structure or de facto veto over passage.
Regional chokepoints are increasingly treated as one interconnected security system. Hormuz, Bab el-Mandeb, the Red Sea and Suez become more closely linked in political and military planning.
The US dollar gradually loses exclusivity in energy trade. The yuan, riyal, dirham, rupee and bilateral settlement mechanisms gain importance without requiring the dollar to disappear.
China gains influence without assuming the main military role. Beijing remains comparatively in the background while increasing its position as an energy buyer, investor, mediator and strategic economic partner.
The United States continues to carry disproportionate security costs. At the same time, new regional institutions, rules and economic relationships are increasingly designed by other states.

The more of these developments occur simultaneously, the stronger the case that the Iran war is not restoring Western dominance, but accelerating the transition towards a more regional and multipolar power structure.

Frequently Asked Questions About the Iran War and the Emerging Power Order

Is the West Losing the Iran War?

A military defeat and a loss of geopolitical dominance are not the same thing. The United States can severely weaken Iranian forces and infrastructure while simultaneously losing institutional influence if regional states subsequently create their own security, trade and chokepoint structures.

Is the New Saudi-Turkish-Pakistani Defence Pact Directed Against Iran?

Officially, no. Türkiye has explicitly stated that the agreement is not directed against any particular country. That position is strategically significant because Iran simultaneously represents one of the most important security risks facing several of the participating states. Reuters

Why Is Türkiye’s Role as a NATO Member So Important?

Türkiye already benefits from NATO’s collective defence guarantee. Ankara’s decision to participate in an additional Article 5-style regional structure with Saudi Arabia and Pakistan therefore suggests that NATO membership alone does not fully cover Türkiye’s regional strategic requirements.

What Role Does Pakistan Play?

Pakistan contributes large armed forces, but its most distinctive strategic characteristic is its nuclear arsenal. This does not automatically mean that Saudi Arabia or Türkiye are covered by a Pakistani nuclear umbrella. Pakistan nevertheless adds a significant strategic deterrence component to the emerging security architecture.

Could Iran Charge Transit Fees in the Strait of Hormuz?

Iran is demanding such fees, and several models are being negotiated. Their legal basis and practical enforceability remain highly contested. Strategically, however, the precise fee level matters less than Iran’s attempt to convert military leverage into permanent political and economic power. Reuters

Does This Mean the End of the Petrodollar?

Not in the short term. A gradual erosion of dollar exclusivity is more plausible. As Gulf energy trade and security relationships become increasingly oriented towards Asia, the scope for alternative payment and financing structures expands.

What Role Does China Play in the Iran War?

China does not need to replace the United States as the region’s military security provider to gain strategic influence. As a major energy buyer, trading partner and investor, Beijing benefits from an order in which economic relationships shift towards Asia and regional political decisions become less dependent on Washington.

Energy Weapon Explained: What Are Directed Energy Weapons?

Global Insight Group — Fri, 03 Jul 2026 09:26:29 +0000

Updated: July 3, 2026

In June 2026, U.S. Secretary Pete Hegseth claimed that the first milestone test of Golden Dome for America had been a “full mission success.” According to his statement, the test used “cutting edge directed energy” and a system called Dynamic Defense Autonomous Defeat, or DDAD, to detect, track and eliminate multiple incoming threats, including drones and cruise missiles. The claim was widely reported, but the technical details remain limited in the public domain. AeroTime

That is exactly why the term Directed Energy Weapons suddenly matters.

For years, directed energy sounded like science fiction: laser cannons, microwave beams and invisible weapons moving at the speed of light. But the strategic context has changed. Cheap drones, cruise missiles and autonomous systems are forcing militaries to rethink how air defense works. If a low-cost drone can force a defender to use a missile worth millions, the defender may win the tactical exchange and still lose the economic war.

Directed Energy Weapons are becoming relevant because they promise a different equation: energy instead of ammunition, electricity instead of interceptors, and near-instant engagement instead of projectile flight time.

What are Directed Energy Weapons?

Directed Energy Weapons, often shortened to DEWs, are weapon systems that use concentrated electromagnetic energy to affect a target. Instead of firing a bullet, shell or missile, they project energy such as laser light, high-power microwaves or other electromagnetic waves toward a specific object.

The U.S. Government Accountability Office defines directed energy weapons as systems that use concentrated electromagnetic energy and include high-energy lasers and high-power electromagnetic systems, such as millimeter-wave and high-power microwave weapons. These systems can degrade electronics, disable drones or physically damage targets depending on power level, frequency, range and exposure time. GAO

In simple terms:

A conventional weapon sends mass toward the target.
A directed energy weapon sends energy toward the target.

That difference changes cost, speed, logistics and battlefield dynamics.

Why Hegseth’s Golden Dome statement matters

Golden Dome is the Trump administration’s proposed next-generation homeland missile defense shield. A January 2025 White House executive order directed the development of an American missile defense architecture against ballistic missiles, hypersonic weapons, advanced cruise missiles and other aerial threats. The order explicitly mentioned non-kinetic missile defense capabilities, which is where directed energy fits into the broader concept. The White House

Hegseth’s June 2026 statement is important because it links three things that usually appear separately:

Autonomous detection and targeting
Directed energy as the effector
Golden Dome as a homeland defense architecture

That combination suggests that the future of missile and drone defense may not be built only around interceptors. It may also rely on sensors, artificial intelligence, command-and-control networks and energy-based effectors working together.

The key point is not that Golden Dome is already a finished shield. It is not. The key point is that the United States is openly signaling that directed energy is becoming part of the next air-defense layer.

How do Directed Energy Weapons work?

There are two main types that matter for today’s military discussion: high-energy lasers and high-power microwave weapons.

High-energy lasers

A high-energy laser concentrates light onto a small point on the target. If enough energy is held on that point for long enough, the target heats up. Material can weaken, burn, deform, melt or fail structurally.

Against a drone, that might mean damaging a wing, motor, sensor, fuel line or control surface. Against a missile, the challenge is harder because the target is faster, tougher and may require more power and better tracking.

Laser weapons are attractive because they travel at the speed of light and do not require traditional ammunition. But they are not magic. A laser must maintain line of sight and keep energy on the target long enough to cause damage.

High-power microwaves

High-power microwave weapons work differently. Instead of burning through material like a laser, they emit electromagnetic energy that can interfere with or damage electronic systems.

That makes them especially interesting against drones, swarms and lightly protected electronics. A microwave system may not need to cut through a drone’s body. It may only need to disrupt its navigation, sensors, communications or control circuits.

This is why directed energy is so closely tied to the drone era. Modern drones are flying electronic systems. If their electronics fail, the platform may become useless even without a visible explosion.

Why Directed Energy Weapons are becoming strategically important

The strategic driver is not just technology. It is cost.

Modern air defense faces a brutal asymmetry: cheap attack systems can force the defender to use expensive interceptors. Iranian-designed Shahed drones have often been estimated in the tens of thousands of dollars per unit, while advanced interceptors can cost millions. Analyses of Iranian drone warfare regularly emphasize this imbalance and the use of commercial or dual-use components in drone production. Drone Warfare

That is the central economic argument for directed energy.

A laser shot does not require a new missile body, rocket motor, seeker, warhead and logistics chain. It requires electricity, cooling and a working fire-control system. That does not make it free, but it can make the marginal cost per engagement far lower than firing an interceptor.

This is why the phrase Energy Weapon should not be understood only as a futuristic weapons category. It should be understood as a response to the economics of drone warfare.

Why Golden Dome is also controversial

Golden Dome is not just a technology program. It is a strategic, financial and geopolitical signal.

The Department of Defense said in 2025 that Golden Dome would be a “system of systems” designed to protect the U.S. homeland from a wide range of missile threats. U.S. Departement of War
The White House framed it as a next-generation shield against ballistic, hypersonic and cruise missile attacks. The White House

But the cost is contested. Reuters reported in May 2026 that the Congressional Budget Office estimated one illustrative Golden-Dome-like architecture could cost about $1.2 trillion over 20 years, far above the Pentagon program director’s lower estimate. Reuters

That matters because directed energy is being presented as a cost-saving technology inside an extremely expensive defense architecture. The paradox is clear:

Directed energy may reduce the cost per shot, but the systems, sensors, satellites, power infrastructure and command networks around it may still cost enormous sums.

What Directed Energy Weapons can do – and what they cannot do

Directed energy weapons can offer several advantages:

near-instant energy delivery,
low marginal cost per engagement,
reduced dependence on missile stockpiles,
rapid response against drones,
potential usefulness against swarms,
fewer conventional ammunition logistics.

But they also have limits.

Laser performance can be affected by weather, smoke, dust, fog, rain, turbulence and target reflectivity. Microwave effects depend on frequency, range, power, shielding and the target’s electronic vulnerability. Directed energy systems also require power generation, cooling, beam control, target tracking and integration into a wider defense network.

That means they are not a replacement for every missile or interceptor. They are more likely to become one layer in a broader defense architecture.

Why this matters now

The Hegseth statement matters because it shows how quickly the public language around directed energy has changed. A few years ago, energy weapons were mostly discussed as experimental programs. Now they are being described in connection with homeland defense, autonomous targeting and real counter-drone missions.

The transcript that triggered this analysis frames directed energy as a turning point in the economics of modern warfare: cheap drones create an expensive defensive burden, and energy-based systems promise to reverse that equation.

That is the right strategic lens.

The real story is not “laser weapons are here.”
The real story is:

Directed Energy Weapons are becoming strategically important because modern warfare is becoming too fast, too cheap and too saturated for missile-only defense.

Geo-Radar Assessment

Directed Energy Weapons are moving from the edge of military research into the center of air-defense planning. Pete Hegseth’s Golden Dome statement should not be read as proof that a complete shield already exists. It should be read as a signal: the United States wants to combine autonomous detection, directed energy and layered defense into a new homeland protection architecture.

The immediate battlefield driver is drone warfare. The deeper strategic driver is cost asymmetry. The long-term risk is escalation: once states believe they can intercept more threats faster and cheaper, they may also become more willing to build larger, more automated defense-and-strike systems.

Directed energy is therefore not just a new weapons category. It is part of a broader shift toward faster, more automated and more economically scalable warfare.

Executive Risk Intelligence Briefing

Iran’s Proxy Network as a Business Risk

What decision-makers should watch now — before proxy escalation becomes a cost, compliance or supply-chain shock.

This 17-page executive briefing translates Iran’s proxy network into concrete business risks: energy price exposure, maritime chokepoints, war-risk premiums, sanctions, shadow fleets, supply-chain disruption and early-warning indicators for board-level decisions.

Energy prices, Hormuz and maritime chokepoints
Sanctions, shadow fleets and compliance exposure
Early-warning indicators for procurement, logistics, treasury and strategy
Executive Risk Questions for internal briefings and board-level decisions

PDF Briefing 17 pages Business Risk Intelligence GFDD Framework™

Q&A: Directed Energy Weapons

What are Directed Energy Weapons?

Directed Energy Weapons are systems that use concentrated electromagnetic energy instead of physical projectiles. The most important current examples are high-energy lasers and high-power microwave weapons.

Are Directed Energy Weapons real?

Yes. They are real military technologies. Several armed forces are testing or integrating directed-energy systems, especially for drone defense and short-range air defense. However, many systems are still in development or limited deployment rather than universal battlefield use.

What is the difference between laser weapons and microwave weapons?

Laser weapons focus light energy onto a target and mainly cause heat damage. Microwave weapons emit electromagnetic energy that can disrupt or damage electronics.

Why are Directed Energy Weapons important for drone warfare?

Because they may reduce the cost of defending against cheap drones. Firing a million-dollar interceptor at a low-cost drone is economically unsustainable over time. Directed energy could lower the cost per engagement if power, cooling and targeting work reliably.

Did Pete Hegseth say Golden Dome used directed energy?

Yes. Hegseth said the first Golden Dome milestone test used “cutting edge directed energy” and that DDAD autonomously cued, targeted and eliminated multiple threats. Public reporting confirms his statement, but detailed independent technical data has not been released. AeroTime

Are Directed Energy Weapons a complete replacement for missiles?

No. They are more likely to become one layer in a larger defense system. Weather, range, power, cooling, target type and line of sight all limit their use.

Why does this matter geopolitically?

Because directed energy could change the economics of air defense. If states can defend against drones and some missiles at lower marginal cost, future conflicts may become more automated, more saturated and more dependent on energy, sensors and software.

Iran’s Proxies: The Hidden Escalation Map of the Middle East

Global Insight Group — Wed, 01 Jul 2026 15:15:06 +0000

Updated: July 1, 2026

Anyone who looks at the Middle East only through the lens of official states sees only half the map. Iran, Israel, the United States, Turkey, Saudi Arabia and Russia may appear to be the main actors. Yet many escalations do not emerge directly between governments, but through armed networks, militias, religious movements, border routes and shadow financing. This is where the real analysis begins: Iran’s proxies are not merely military auxiliaries. They are political power instruments, regional pressure tools and early-warning signals for larger conflicts.

The term “proxy” may sound technical. It refers to armed groups that pursue their own interests while also being supported, trained, financed or strategically used by a state. In Iran’s case, many analysts refer to the “Axis of Resistance” — a network positioned against Israel, the United States and Western influence in the region. This network includes, among others, Lebanese Hezbollah, Iraqi militias, pro-Iranian groups in Syria and the Houthis in Yemen. Iran’s Islamic Revolutionary Guard Corps, especially the Quds Force, is widely seen as a central connection point for training, weapons, financing and strategic coordination.

Why Iran’s Proxies Matter

Iran’s proxies serve several functions for Tehran at the same time. First, they extend Iran’s reach far beyond its own borders. Second, they create deterrence against Israel and the United States. Third, they allow escalation below the threshold of direct war. Iran can generate pressure without always appearing openly as the attacker.

This is strategically important. A rocket attack from Lebanon, a drone launched from Iraq, an attack on ships in the Red Sea or militia activity in Syria can shake regional markets without an official state-to-state war being declared. That is precisely why Iran’s proxies form a hidden escalation map: they show where conflicts can be prepared, outsourced or calibrated.

Lebanon: Hezbollah as the Strongest Node

Hezbollah is Iran’s best-known and arguably most important partner. It is not merely a militia, but also a political party, social apparatus, security structure and military organization. For Iran, Hezbollah forms a direct front against Israel. For Lebanon, it is also a power factor the state can hardly control in full.

Its role is particularly dangerous because it combines military capability with political entrenchment. Even if Hezbollah has been weakened by Israeli strikes, it remains a central component of Iranian deterrence. For Israel, it is a permanent threat on the northern border. For Iran, it is a strategic lever to put Israel under pressure without necessarily attacking directly.

Iraq: Militias Between State, Politics and Shadow Power

In Iraq, the picture is more complex. Various Iran-aligned militias operate there, including Kataib Hezbollah, Asaib Ahl al-Haq, Harakat al-Nujaba and other groups within or around the Popular Mobilization Forces. These militias are not simply fighters outside the state. Some are formally embedded in state structures, hold political connections, economic interests and influence over security apparatuses.

That is exactly what makes Iraq such an important early-warning space. Iran’s proxies in Iraq can threaten U.S. troops, exert domestic pressure on Baghdad, control border routes and benefit from state funding or institutional proximity at the same time. Iraq is therefore not only a theater of geopolitical competition, but a hybrid space where state, militia, party and business network increasingly overlap.

Syria: The Damaged Corridor

Syria was long the central land corridor between Iran, Iraq and Lebanon. Through Syria, weapons, fighters and equipment could be moved toward Hezbollah. But this corridor has become more unstable. After major political and military shifts in Syria, Iran’s influence there is no longer as self-evident as it once was. Reports indicate that the influence of Iran and Hezbollah in Syria has been significantly weakened after heavy Israeli strikes and the loss of power by the Assad camp.

Still, Syria has not disappeared from the escalation map. It remains a space for smuggling, local militias, border conflicts, weapons routes and covert networks. Precisely because state order there is fragile, small groups can create major effects.

Yemen and the Red Sea: The Maritime Lever

Even though Yemen is not geographically part of Iraq, Syria or Lebanon, the role of the Houthis is central to the overall picture. Iranian support has helped the Houthis expand their military capabilities significantly, especially in drones, missiles and attacks on maritime targets. The Council on Foreign Relations describes the Houthis as an informal partner of Iran whose reach has grown through Iranian weapons, expertise and strategic alignment.

This creates a powerful lever: whoever exerts pressure on the Red Sea and Bab al-Mandab influences not only regional security, but also global supply chains, insurance costs and energy flows. Iran’s proxies are therefore not only a military problem. They can also become an economic risk.

Does Iran Control Everything Directly?

No. And this is where the analysis becomes especially important. Iran’s proxies are not pure puppets. Many of these groups have their own motives: local power, religious ideology, economic interests, political control, protection of their own networks or rivalry with other groups. Iran provides direction, support and a strategic framework. But these groups do not always act as fully remote-controlled actors.

This makes the situation more dangerous, not less. If proxies have their own interests, they can trigger escalations that Tehran does not fully control. At the same time, Iran can benefit from this ambiguity because responsibility becomes harder to prove.

Israel, the United States and Turkey: Counter-Power Without the Same Model

Israel does not have a proxy network comparable to Iran’s model. Israel relies more heavily on its own air power, intelligence services, cyber capabilities, precision strikes and close security cooperation with the United States. The United States, in turn, works with partner forces and governments, for example in Iraq or Syria, but usually in a more institutionalized way than Iran.

Turkey follows its own logic of influence, particularly in Syria and northern Iraq. It supports or influences local groups, especially where Kurdish forces, PKK-linked structures or its own security interests are involved. This creates a dense counter-network: Iran works through Shiite-oriented militia axes, Turkey through its own regional partners, Israel through direct military superiority, and the United States through security architectures, sanctions and military bases.

The Hidden Layer: Oil, Money and Routes

The real power map lies beneath the surface. This is not only about rockets. It is about oil sales despite sanctions, shadow fleets, front companies, money changers, gold, smuggling routes, religious foundations, border crossings and information warfare.

Oil plays a key role. Iran needs revenue to finance the state, the military and partner networks. At the same time, proxies can exert pressure on energy infrastructure, trade routes and maritime chokepoints. Hormuz, Bab al-Mandab, the Red Sea, Iraq and Syria are therefore not just places on a map. They are nodes of geopolitical risk transmission.

Conclusion: The Next Escalation May Not Start Where Everyone Is Looking

Iran’s proxies are the hidden escalation map of the Middle East because they connect political, military, economic and religious power lines. Anyone who only watches official statements from Tehran, Washington or Jerusalem misses the deeper movements.

The next crisis does not have to begin with a declaration of war. It can start with a militia attack, a drone strike, a blocked sea route, a new sanction, a damaged oil tanker or a local border conflict. That is why Iran’s proxies are not a side issue. They are an early-warning system for the next phase of regional instability.

Executive Risk Intelligence Briefing

Iran’s Proxy Network as a Business Risk

What decision-makers should watch now — before proxy escalation becomes a cost, compliance or supply-chain shock.

Energy prices, Hormuz and maritime chokepoints
Sanctions, shadow fleets and compliance exposure
Early-warning indicators for procurement, logistics, treasury and strategy
Executive Risk Questions for internal briefings and board-level decisions

PDF Briefing 17 pages Business Risk Intelligence GFDD Framework™

Q&A: Frequently Asked Questions About Iran’s Proxies

What are Iran’s proxies?

Iran’s proxies are armed groups and political networks supported by Iran while also pursuing their own regional interests. They include Hezbollah, Iraqi militias, pro-Iranian groups in Syria and the Houthis in Yemen.

Why does Iran use proxies?

Iran uses proxies to expand its influence, deter Israel and the United States, pressure regional opponents and outsource escalation without always having to act directly through its own military.

Are Iran’s proxies fully controlled by Tehran?

No. Many groups have their own interests. Iran provides support, strategy and resources, but the groups do not always act under full control.

Does Israel also have proxies?

Israel relies more on direct military power, intelligence operations, cyber capabilities and state alliances. It does not currently have a proxy network comparable to Iran’s model.

Why are Iran’s proxies relevant for companies?

Because they can influence energy prices, supply chains, insurance premiums, sanctions exposure and maritime trade routes. Hormuz, Bab al-Mandab, Iraq, Syria and Lebanon are particularly important risk zones.

Iran-conflict-2026: Why the US-Iran Deal, not a real relaxation brings
An analysis of energy prices, maritime constraints and the economic consequences of regional escalation.

Lagarde gives the all-clear: Why Hormuz despite the ECB to Signal a risk for the company remains
Christine Lagarde sends a reassuring Signal that The European Central Bank currently sees clearly still not a hazardous wage-price spiral. The inflation shock is great, but from the point of view of the ECB’s not so big that long-term inflation expectations got out of control.

Geo-Radar: geo-political news analysis in the last 48 hours →
How corporate political escalations sooner you can recognize before in costs, delays in delivery or Compliance risks.

Gold is at a crossroads: Backs up the ‘Water-Oil-Clash’ their assets or threatens the Petro-dollar-shock?
Focus on Gold stands not only as a precious metal, but as a strategic trust Asset in the field of tension of Inflation, public debt, energy policy, sanctions regimes and global restructuring.

Lagarde Signals Relief: Why Hormuz Remains a Business Risk Despite the ECB’s Message

Global Insight Group — Tue, 23 Jun 2026 09:20:39 +0000

Updated: June 23, 2026

Christine Lagarde has sent a reassuring signal: the European Central Bank currently does not appear to see a dangerous wage-price spiral. The inflation shock is significant, but from the ECB’s perspective, not yet strong enough to push long-term inflation expectations out of control.

That sounds like relief.

But this is exactly where companies need to be careful.

A monetary policy reassurance is not the same as operational reassurance.

While the ECB focuses on inflation expectations, wages, price stability and the interest-rate path, companies experience geopolitical crises elsewhere: in delivery times, energy prices, insurance costs, transport costs and planning reliability.

What Did Lagarde Say About Inflation?

The official message is essentially this: the situation is tense, but manageable.

Lagarde is signaling that the ECB does not currently see a dangerous wage-price spiral. Higher energy prices and geopolitical risks are weighing on the economy, but from the ECB’s perspective, they have not yet become permanently embedded in wages, prices and inflation expectations.

For markets, this matters. Central banks do not want to create panic. Even small shifts in wording can change expectations.

So the message is not: “Everything is fine.”

It is closer to this:

The situation remains difficult.
But from a monetary policy perspective, it is still under control.

Why Did the ECB Raise Interest Rates on June 11?

Despite this calming communication, the ECB Governing Council decided on June 11 to raise interest rates by 25 basis points. The deposit facility rate was lifted to 2.25 percent.

That shows one thing clearly: the ECB does not see the situation as harmless.

The rate hike was a signal that higher energy prices and geopolitical shocks cannot simply be ignored. At the same time, Lagarde appears to be trying to prevent this from turning into a new wave of interest-rate panic.

The key point is this:

The ECB is responding to risks.
But it does not want to trigger an escalation of expectations.

Is the Strait of Hormuz Still a Risk for Energy Prices and Supply Chains?

Yes.

The Strait of Hormuz is one of the world’s most important maritime chokepoints. When traffic through this corridor is disrupted, the issue is not only oil prices. It is energy supply, liquefied natural gas, freight routes, insurance, geopolitical risk premiums and trust in global supply chains.

Even if the situation eases in the short term, the consequences do not disappear immediately.

A ship that is rerouted is missing somewhere else.
A delayed delivery creates follow-on costs.
More expensive insurance puts pressure on margins.
A company facing uncertainty may postpone investment.

The problem is not only the acute crisis.

The problem is the aftershock.

The Official Narrative: The Situation Is Calming Down

The official narrative is this: the situation remains tense, but the worst escalation may be avoided.

This narrative fits several signals: diplomatic talks, cautious easing in oil markets, partially increasing tanker traffic through Hormuz, and the ECB’s statement that no dangerous wage-price spiral has emerged so far.

For markets, this has a stabilizing effect.

No new panic.
No aggressive interest-rate shock messaging.
No direct statement that inflation is out of control.

But this narrative describes only one layer.

The Hidden Conflict Logic: Why the Crisis Is Not Resolved

Beneath the official narrative lies another layer.

Geopolitical conflicts do not disappear just because markets react with short-term relief or central banks choose reassuring words.

Trump needs to save face.
Netanyahu needs political and military room for maneuver.
Iran needs to project strength without becoming fully isolated.
Hardliners on all sides can sabotage any compromise.
Lebanon remains a potential escalation space.
Hormuz remains a strategic pressure point.

While the official narrative focuses on inflation, interest rates and market reassurance, the real follow-on risks lie in a more complex power field: Iran, Hormuz, China, Turkey, energy flows and global supply chains.

That means:

The official narrative speaks of reassurance.
The hidden conflict logic speaks of unresolved power interests.

This is where the risk emerges.

Not because every reassurance is wrong. But because reassurance often describes only one part of reality.

Why This Reassurance Could Become Expensive for Companies

If companies interpret official easing signals too early as operational normalization, it can become expensive.

Supply chain risks do not disappear because a central bank delivers a calming message. They often show up with a delay: in higher insurance costs, longer transport times, weaker planning reliability, more expensive security premiums and pressured margins.

Companies that only react once these effects become visible in quarterly results are reacting too late.

For companies, the decisive question is therefore not only whether the ECB sees a wage-price spiral.

The decisive questions are:

Will supply chains remain stable?
Will energy prices remain predictable?
Will transport routes remain insurable?
Will customer commitments remain reliable?
Will margins remain resilient?

These are operational questions. And they are not automatically answered simply because the monetary policy situation appears manageable.

Which Risks Remain Below the Surface?

Many economic damages do not become visible immediately.

At first, the message is: markets remain calm.
Then insurance premiums rise.
Then routes change.
Then inventories are adjusted.
Then margins come under pressure.
Then companies postpone investment.

And at some point, the question becomes:

Why did no one react earlier?

This is exactly why geopolitical signals matter. Not because every signal immediately means catastrophe. But because risks often build before they are officially recognized as a crisis.

What Should Companies Monitor Now?

Companies should not only watch the next ECB statement or the next oil-price ticker.

What matters more is the combination of several signals:

How is tanker traffic through Hormuz developing?
Do insurance costs for ships and freight remain elevated?
Are there new security warnings for maritime routes?
Are LNG and oil transports being rerouted on a lasting basis?
Are energy prices rising only temporarily, or structurally?
Do diplomatic talks remain stable?
Are new spoilers emerging in Lebanon, Iran or through regional proxies?

Only the combination of these signals creates a realistic picture.

Q&A: Common questions about Lagarde, the ECB, the Hormuz and supply chains

Has Lagarde really given the all-clear?

Lagarde has been no full economic all-clear. She has signaled that the ECB is still not a hazardous wage-price spiral, or permanently entankerte inflation expectations.

Why has the ECB, then, nevertheless, the interest rates?

The ECB has, at 11. In June, the interest rates by 25 basis points raised, because energy prices and geopolitical risks weigh on Inflation. The increase in interest rates was a Signal that the ECB is ready before the price pressure on permanently.

What does an interest rate of 2.25 percent?

The Deposit rate of 2.25 percent, the ECB ignored the situation. At the same time, the current communication acts as if she wanted to prevent that markets are pricing in a new aggressive interest rate increase phase.

Why is Hormuz important for Europe?

The Strait of Hormuz is transport to a Central bottleneck for Oil and gas. Disturbances in energy prices, transport costs, insurance, and delivery can affect chains in the world, even in Europe.

Falling Oil prices are automatically sound the all-clear?

No. Oil prices in the short term fall when markets react to diplomatic signals. This does not automatically mean that supply chains, insurance, and geopolitical risks are back to normal.

What is the official story?

The official narrative is that The situation is tense, but controllable. Diplomatic signals, more stable markets and cautious statements of the ECB is to show that no panic is necessary.

What are the hidden conflict of logic is that?

The covert conflict logic describes the interests of power under the surface, Face, domestic political pressure, military scope, hardline, regional Deputy conflicts and strategic control of Hormuz.

What does this mean for companies?

Companies should not ignore the official all-clear messages, but also not blindly accept. The decisive factor is whether the operating risks such as delivery times, energy prices, insurances and transport costs actually normalize.

Conclusion: the all-clear is not the same as the all-clear

Lagarde’s message can be from the point of view of monetary policy in a comprehensible manner. If inflation expectations remain stable, and no wage-price spiral, do not need to respond to the ECB’s aggressive.

But it does not follow that all is well.

The real economy is not only then, if the ECB raises the Alarm. She suffers when supply chains are uncertain energy prices fluctuate and predictability is lost.

Therefore, the better question to ask is not:

Lagarde is right?

But:

What are the risks remain under the surface, although officially the all-clear is given?

That’s exactly where strategic risk analysis begins.

Author of Global Insight Group Intelligence:

Der Beitrag Lagarde Signals Relief: Why Hormuz Remains a Business Risk Despite the ECB’s Message erschien zuerst auf Schaaf.

Gaza, the Board of Peace and the New Energy Order: Why European Companies Are Underestimating the Strategic Risk

Global Insight Group — Sat, 23 May 2026 15:24:29 +0000

Strategic Risk Intelligence Brief by Global Insight Group.
This analysis is based on the GFDD Framework™ developed by Michaela Schaaf-Hoffelner and is designed for executives, investors and strategic decision-makers.

Updated: May 22, 2026

While the world is focused on the Iran conflict and the tense situation around the Strait of Hormuz, a quieter but strategically far more consequential realignment is taking place in the shadow of the headlines. A completely new political, financial and digital architecture is currently being built for the Gaza Strip – a prototype that could have consequences far beyond the region and reshape the global energy and financial order.

Anyone who views Gaza only as a humanitarian crisis is missing the emergence of a plan that could redefine the rules for international intervention, reconstruction finance and access to strategic resources. For strategic decision-makers, ignoring this blind spot would be a critical mistake.

1. Board of Peace: A Shadow Cabinet for Gaza?

In the Background of the military conflicts, a new Governance was designed structure for Gaza. A so-called ‘Board of Peace’, equipped with international actors, to act as the parent instance. To him, a ‘technocratic’ administrative arm by the name of NCAG, consisting of Palestinian experts is. That the Board of Peace as the US-led structure to oversee the Gaza Plan was established, and its implementation is currently stalled, reported Reuters. The formal Charter of the Board is available on the official website of Board of Peace released.

Officially, the goal is efficient administration without political ideology. But the core strategic question for any company is this:
What does it mean for legal certainty and market access when sovereignty – the right to self-determination – is replaced by an externally appointed, unelected committee of experts?

The governance and legitimacy problems of this construction have been critically assessed by institutions including the EU Institute for Security Studies, Chatham House and Carnegie Endowment.

2. “Project Sunrise”: The Vision of an AI City and the Reality of Digital Control

Alongside the new governance model, billion-dollar reconstruction visions are circulating under the codename Project Sunrise. The narratives speak of AI-enabled smart cities, digital IDs for all citizens and blockchain-based land allocation. The Wall Street Journal reported on the Project Sunrise plan to transform Gaza into a high-tech metropolis. The leaked GREAT Trust concept paper was documented by The Washington Post.

But behind this futuristic narrative lies a much more tangible reality: the planned introduction of an AI-enabled digital infrastructure backbone.

Yet behind this futuristic veil lies a much more tangible reality: the planned introduction of an “AI-enabled digital infrastructure backbone.” Officially, this digital foundation is intended to make the allocation of reconstruction billions transparent and prevent corruption, similar to the “Diella” system in Albania. Reuters and The Guardia reported on Albania’s AI-supported procurement model Diella. However, the critical question for investors and companies is this: Who controls this algorithm? Who decides which companies and projects receive funding when AI controls the flow of money?

3. The Real Price: Gaza and the Gas Fields of the Eastern Mediterranean

Why this immense technological and administrative effort in such a small and complex territory? The answer does not lie in Gaza itself, but only a few kilometers off its coast.

The Gaza Strip is located in close geographical proximity to the vast natural gas fields of the Eastern Mediterranean, including Israel’s Leviathan gas field. These reserves are a central component of Europe’s new energy strategy.

The strategic importance of Leviathan as a major gas field in the Eastern Mediterranean, as well as Chevron’s recent expansion decision, has been confirmed by Chevron, World Oil and Reuters via Boursorama. The fact that Israeli gas can be exported toward Europe through Egyptian LNG infrastructure has already been addressed in connection with the EU-Israel-Egypt gas framework by Reuters via Euronews and Pipeline & Gas Journal / Reuters.

The central and uncomfortable question is therefore:
Could a digitally monitored and externally stabilized Gaza Strip become the decisive geopolitical anchor for securing multibillion-dollar energy projects and pipelines in this strategically vital region?

Further Analysis

Schaaf-Media: Iran war and the oil price shock: Who wins and who really loses?
Schaaf-Media: USA 2026: Oil & geopolitics – Strategic Executive Briefing
Schaaf-Media: Gold, silver and Oil: What Is Really Behind the Sudden Crash
Schaaf-Media: Oil as a Power Instrument: Why Energy Will Dominate Geopolitics and Markets in 2026
Schaaf-Media: Oil Price Outlook 2025: Russia, China, Trump, Trade Tariffs and the Price of a Barrel – What Investors Need to Know Now

Legal Notice / Disclaimer

This article is intended solely for informational and educational purposes. It does not constitute investment advice, an investment recommendation, or a solicitation to buy or sell securities, commodities, precious metals or other financial instruments.

The assessments contained in this article reflect an analytical and journalistic interpretation at the time of publication. They do not replace individual advice from qualified financial, investment or tax advisors.

Financial markets are subject to significant fluctuations. Past performance is not a reliable indicator of future results. Every investment decision is made at the reader’s own risk. The author assumes no liability for financial losses or decisions made on the basis of this article.

Author of Global Insight Group Intelligence:

Der Beitrag Gaza, the Board of Peace and the New Energy Order: Why European Companies Are Underestimating the Strategic Risk erschien zuerst auf Schaaf.

Iran war and oil price shock: who wins and who really loses?

Global Insight Group — Thu, 07 May 2026 11:31:05 +0000

For: Management
Date: 2026-05-07
time horizon
Strategic context: now → 12 – 30 months
Structural context: now → 5-10 years

What politics, markets and media are currently telling

As of May 7, 2026, the most important strategic observation is not who militarily asserts the upper hand, but who has replacement routes, storage buffers, fiscal firepower and price-transfer power. Since the start of the war on February 28th and the formal ceasefire of April 8th, the situation around the Strait of Hormus has remained unstable. The United Arab Emirates sent schools and colleges back to distance learning from May 5th to 8th, including The National News and Gulf News report; At the same time, Donald Trump temporarily paused the US mission ‘Project Freedom’ to open the strait on May 5, although the blockade will formally remain in force. NBC News reported on the temporary suspension of the mission. At the same time, Iran is examining a US peace bill that has just not completely cleared up key points of contention such as the Iranian nuclear program and the permanent opening of the strait. both BBC as well as Al Jazeera continue to report significant differences between Washington and Tehran. The market therefore continues to react extremely volatile: After a deal-driven crash to around 98 dollars, Brent quoted again at around 101.8 dollars per barrel on May 7th; At the end of April, Oil was still at 124 dollars at times, and the International Energy Agency described the shock as the most serious supply disruption in oil history.

Where the shock actually arises

The core of the problem is physical and logistical. In 2025, almost 20 million barrels of oil per day ran through the Strait of Hormus; Only 3.5 to 5.5 million barrels per day can be diverted via alternative export routes. So the region is not systemically important because of headlines, but because it remains a bottleneck for which there is still no full replacement. The IEA states that global oil supply collapsed by 10.1 million barrels per day in March alone. Reuters also reports that the pressure on offer could intensify even in the event of a conflict end because global stocks have already melted away. At the same time, stocks were massively mined outside of the Gulf, while in the Golf due to a lack of drains, more floating warehousing arose again. The coordinated release of 400 million barrels from strategic reserves buys time, but does not replace normal physical flows.

From this follows the actual dividing line of this shock: not east against west, but optionality against dependency. If you have your own production, large reserves, alternative pipelines or robust supply relationships, you will get through the crisis relatively better. Anyone who is dependent on cheap, steady and safe sea transport will lose. This is exactly why the winners and losers are not congruent with the military fronts.

Who wins relatively and why

The US is not a clean macroeconomic winner, but the clearest relative winner in the energy sector is among the major economies. The U.S. Energy Information Administration puts US crude oil production at a record of 13.6 million barrels per day for 2025. At the same time, Reuters recently reported record values for US distillate exports, and US stocks were largely driven by foreign demand. For producers, midstream companies and exporters, this is a gain in margin and geopolitical leverage. But the downside is real: even the US Federal Reserve now says that the war is becoming more and more like an inflationary shock from an economic point of view. In other words: America Inc. wins more than the American consumer.

The United Arab Emirates are the most strategically interesting special case. Abu Dhabi left OPEC and OPEC+ on May 1st and openly justifies this with the aim of producing what the world market needs, without any quota restrictions. Forbes describes this step as a strategic repositioning of a state whose state assets now exceed pure crude oil dependency. Reuters also reports that Abu Dhabi’s state oil sector is targeting 5 million barrels of daily production capacity by 2027. What matters is not only politics, but the infrastructure: In addition to Saudi Arabia, only the Emirates have a relevant crude oil pipeline that Hormus can bypass. The IEA puts the current capacity of the line to Fujairah at just under 1.8 million barrels per day. This is exactly why Fujairah and Khor Fakkan have become the decisive trading lifelines in the Gulf in recent weeks. Reuters Describes both ports as fragile key veins of regional energy and trade architecture. Nevertheless, it would be too rough to label the UAE as the ‘big winner of the war’: According to Reuters, the funding fell back to just under 1.9 million barrels per day in March, the east coast infrastructure was attacked, the airspace was temporarily restricted and distance learning nationwide reactivated. The correct verdict is therefore: relative winners among the Gulf States, but by no means sure winners.

China is better buffered than almost any other major importer, but here too, ‘winner’ is only half right. Reuters reports that China’s independent refineries continue to buy Iranian oil despite US pressure; In March, purchases were at a record level of 1.8 million barrels per day, even though demand has recently decreased due to weak refinery margins. The buffer is even more important: the EIA estimates China’s strategic oil stocks at almost 1.4 billion barrels at the end of 2025. This gives Beijing time and flexibility. At the same time, Analysis by the Center for Strategic and International Studies and the Brookings Institution show that while China is gaining geopolitical and diplomatic opportunities, it also shows energy volatility, supply chain risks and weaker global demand for Chinese exports suffers. The more precise diagnosis is therefore: China is not the winner of the crisis, but the best buffered large Asian player.

Outside of the Gulf, alternative exporting countries in particular benefit. In Russia, the oil price shock is already sufficient for Moscow to be able to buy foreign exchange for the National Wealth Fund again. Reuters reports that the war will give Russia additional currency inflows again despite sanctions; At the same time, the windfall is smaller than many had expected because discounts, sanctions and Ukrainian attacks on infrastructure limit the advantage. In Norway, on the other hand, demand from Asia is visibly increasing; The country reports higher product and LNG demand and the highest quarterly profits from a major Nordic energy provider in three years. Here, too, the following applies: The winners are those who do not depend on the golf, but can deliver in its gap.

Who loses real and why

From an economic point of view, the biggest loser remains Iran itself. Reuters describes the country as ‘battered and isolated’: jobs were lost, prices rose, factories, power plants, airports, bridges and rail connections were damaged, and without Financing of ongoing government obligations is difficult even to facilitate sanctions. Estimates that Reuters quotes assume that energy-related repair costs in the region alone could rise to up to $58 billion. It is therefore not to be confused with economic strength that Tehran can exert pressure on the world market via the strait. It is negotiating power from the position of structural weakness.

The European Union is the central macroeconomic loser outside the immediate war zone. Only around 4 percent of the crude oil flows through Hormus go directly to Europe; The actual vulnerability runs here via the price channel, the industry and the financing costs. Reuters reports that Europe’s gas prices have risen by about a third since the beginning of the war. Eurozone inflation jumped to 3.0 percent in April, mainly due to energy. The Commission is already warning internally about possible demand rationing, jet fuel bottlenecks and problems refilling the gas storage facilities if the shock persists. Added to this is a second blow from trade policy: the US threat to raise EU car tariffs from 15 to 25 percent has charged another uncertainty block to the already ailing industrial sector. Reuters reports that the negotiations between Brussels and Washington are coming under additional pressure. Al Jazeera reports that European premium manufacturers in particular would be massively affected; A German institute estimates a potential production loss of almost 18 billion dollars for Germany alone. So Europe’s problem is not primarily physical defects, but expensive energy plus weaker industry plus intensified transatlantic risks.

The rest of the Asian import block – especially India, Japan and South Korea – pays the highest real-world price. The IEA shows that China and India together took in 44 percent of Hormuz crude oil exports, while Japan and Korea were particularly dependent on this corridor. The International Monetary Fund explicitly calls Asia the most exposed region: oil and gas correspond to about 4 percent of GDP there, almost twice as much as in Europe, and a long-lasting shock could be cumulatively cumulative by 1 to 2 by 2027 Press percentage points. South China Morning Post also refers to the exceptionally high energy dependency of many Asian economies. Reuters recently reported that Asia’s oil imports collapsed by 30 percent in April; Refineries fighting with a shortage of raw materials, jet fuel and diesel prices in Singapore have risen massively, and even governments with subsidies or tax relief can only temporarily dampen this pressure. China is therefore rather the exception within Asia – not the pattern.

The clear sector losers include global shipping, airlines and energy-intensive industries. Reuters reports war risk premiums, some of which have increased by more than 1000 percent; On individual trips, the additional premium jumped from 0.25 to up to 3 percent of the ship’s value. Shipping companies redirect ships around the Cape of Good Hope, which costs time and fuel. At the same time, the US Department of Transport reported loudly Reuters for March a 56 percent jump in fuel costs for large US airlines; In Europe, a large network airline already puts the additional jet-fuel cost block in 2026 at 1.7 billion euros. In industry, the same mechanism becomes visible: the mood in German chemistry has fallen at its lowest level in almost three years due to supply chain disruptions and higher input costs. These industries are most directly bearing the price of the war because they do not skim off geopolitical pensions, but only pay for more expensive energy and more expensive logistics.

What global power shifts become visible

Below the visible war dynamics, there may be a much lower system shift. The conflict over Iran, Hormus and the Middle East is increasingly acting like an accelerator of already ongoing fragmentation processes within the global order.

The focus is less on the question of whether the US dollar will lose its dominance in the short term and whether the world will gradually break into several parallel powers, trade and financial areas. It is precisely this development that is now being intensively discussed by think tanks, central banks and macro analysts. BRICS states are building alternative payment structures, central banks are increasingly buying physical gold, bilateral trade agreements are partially bypassing the dollar, China is expanding Yuan trading areas, and raw material and supply chains are increasingly being geopolitized. Energy is once again developing into a strategic instrument of power.

Hormus – not just oil

The conflict in the Middle East is therefore not to be considered in isolation. Hormus connects several global areas of tension at the same time: the petrodollar system, the strategic competition between China and the USA, increasing cooperation within the BRICS countries, global energy dependencies, maritime trade routes and control over critical raw materials and alternative power blocks.

The increasing concentration of geopolitical interests around China, Russia, Iran, India and the Gulf region is particularly striking. Many of these states have enormous resources, production or population resources, but historically they were heavily involved in Western-dominated financial, trade and security structures.

This is exactly where a new dynamic seems to be building up: not the sudden collapse of the previous order, but a slow fragmentation of global centers of power.

Against this background, several US decisions seem strategically less random than they appear at first glance. The tightened customs policy, the growing pressure on European allies, the focus on critical raw materials, the increased interest in Greenland and the Arctic, and the power projection in the Middle East and the strategic competition with China in the Indo-Pacific together result in a significantly greater geopolitical image.

Plausible scenario analysis

A plausible scenario analysis could therefore be that the USA may no longer primarily try to expand its global dominance, but increasingly to slow down the relative loss of systemic control and actively manage the transition to a multipolar order.

At the same time, another contradiction arises. While Washington is trying to stabilize its strategic position, other analysts argue that aggressive tariffs, geopolitical uncertainty, pressure on allies and increasing fragmentation could even accelerate de-dollation over the long term.

It is precisely this ambiguity that is crucial. GFDD Diagnostics™ Therefore, do not analyze the question of ‘who is right’, but which structural shifts in power due to conflicts, energy crises, raw material politics and geopolitical fragmentation actually arise.

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Which scenarios would move the ranking now

Scenario A – High probability (approx. 55-65%)

Fragile ceasefire and controlled instability

In the likely-looking base scenario, a fragile ceasefire with periodic attacks, political de-escalation rhetoric and persistently disturbed physical rivers remains. This is exactly what the current signals speak for: Washington pauses the opening mission, but is formally maintaining the blockage; Tehran examines suggestions, but at the same time calls them an American wish list; Ships continue to be attacked and the Emirates live under tightened security precautions.

For the market, this would mean high volatility, but not a rapid relapse to pre-war level. In this world, producers with flexibility remain relatively at an advantage, while importing countries and transport-intensive sectors continue to lose.

Scenario B – Mean probability (approx. 25-35%)

Partial and step-by-step relaxation

In the more favorable scenario, there will be a viable memorandum between the USA and Iran in the next few weeks, which will end the war phase and prepare the opening of the Strait of Hormus. Then financial markets would relax very quickly, as the recent oil price drop on a deal hope has already shown.

However, this does not mean that the physical crisis ends immediately. Reuters and IEA both point out that re-commissioning, repairs, ship flows and stock reconstruction are likely to take months.

In this scenario, today’s relative winners such as US export sectors, Russia or alternative supplier countries lose windfall power, while airlines, industry and importing countries would benefit first.

Scenario C – low probability (approx. 10-15%)

Escalation with a high strategic impact

In the escalation scenario – i.e. new massive attacks on ports, tankers or energy systems – the current winner-loser list would be even sharper. The IEA has already shown how quickly the shock has developed into a historical supply disorder, and AP News Reported fire again on May 4th in the Fujairah Oil Industry Zone, ship attacks and an oil price jump.

Then Asia, Europe, airlines, chemicals and logistics in particular would come under additional pressure. Even supposed winners like the UAE would then slip more into the loss zone because their bypass infrastructure and east coast ports are also directly exposed.

Strategically, this scenario would be particularly relevant because it could accelerate not only energy prices but also supply chains, inflation, insurance risks, global financial markets and geopolitical fragmentation.

Judgment for decision-makers – Strategic Implications

The sober answer to the title question is: There are no pure winners, but there are clear relative winners and unambiguous losers. Relative winners today are primarily players with their own production, extraordinary stocks or alternative export routes – the US energy sector, the UAE in a weakened form, China as a better buffered importer and selected non-golf exporters. The clear losers are Iran itself, import-dependent economies in Asia, Europe’s industrial complex as well as shipping, airlines and energy-intensive industries. However, the most strategically important conclusion is: Falling Futures are not the same as normalization. As long as stocks are melting, systems are damaged and Hormus remains politically open, but only physically usable, the crisis is not over – even if the next diplomatic breakthrough on the screen looks friendly.

What most people overlook

The real core of the current dynamic may not be the question of who wins militarily, but in the fact that controlled instability has become strategically or economically useful for several actors at the same time. This is exactly where a situation arises in which many sides officially communicate de-escalation, while structural incentives for complete stabilization remain weak.

Original GFDD Analysis by Michaela Schaaf-Hoffelner / Global Insight Group.

Frequently Asked Questions about Iran War and Oil Price Shock

Is the road of Hormus open again?

Not in the normal sense. There have been individual transits and clear hopes on the markets in the last few days, but Washington has only paused ‘Project Freedom’, and Reuters describes the peace bill itself as thin and incomplete in central points. The sea route is therefore politically in negotiation, but not yet physically and legally normalized.

Who benefits the most from high oil prices?

Producers and exporters with free or expandable capacity are currently benefiting the most, i.e. the US energy sector in particular and the UAE in a more limited form and alternative supplier countries outside of the Gulf. But even there, what looks like a profit at the company level can become inflationary and politically problematic at the economic level.

Is Europe more affected than the USA?

Yes, but above all different. The USA is benefiting more from production and exports, but at the same time suffers from higher prices and inflation risks. Although Europe obtains far fewer molecules directly through Hormus than Asia, it is hit by higher gas and oil prices, industrial pollution, interest rate pressure and now also through new US car tariff risks.

Is China winner or just better buffered?

Rather better buffered. China continues to have access to Iranian barrels, has enormous strategic and commercial warehouses and is able to cushion the shock better than Japan, Korea or India. But think-tank analyzes and market data also show that weaker export demand, energy volatility and supply chain risks are also affecting China.

Do the oil prices fall permanently after a deal?

Financially probably fast, physically not. Markets are rapidly encouraging political relaxation, but inventory reductions, infrastructure repairs, bottlenecks in products such as Jet Fuel and the gradual resumption of normal tanker movements suggest real market relaxation would be significantly slower than the first price slip on the futures markets.

Further Analysis

schaaf-media: Gold Falls Despite the Middle East Crisis: A Warning Sign?
schaaf-media: Italy’s Diesel Crisis: Are Europe’s Supply Chains at Risk?
schaaf-media: Gold Price Forecast 2027: Why the Interest-Rate Trap Is Supercharging Gold
schaaf-media: Europe’s Critical Buffers Are Shrinking: Are Businesses Facing a New Supply Shock?
schaaf-media: USA 2026: Oil & Geopolitics – Strategic Executive Briefing
schaaf-media: Gold, Silver and Oil: What’s really behind the sudden crash
schaaf-media: Oil as an instrument of power: Why Energy Dominates Geopolitics and Markets 2026
schaaf-media: Oil Price Outlook 2025: Russia, China, Trump, Trade Tariffs and Barrel Oil – What Investors Need to Know Now

Legal Notice / Disclaimer

This article serves exclusively Information and Educational Purposes. he puts No investment advice, no investment recommendation and no request to buy or sell of securities, commodities, precious metals or other financial instruments.

The assessments contained in this article reflect a Analytical and journalistic classification the market development of gold, silver and oil at the time of publication. they replace No individual advice by qualified financial, investment or tax advisors.

Financial markets are subject to significant fluctuations. Past developments are not a reliable indicator of future results. Each investment decision is at your own risk. The author assumes no liability for financial losses or decisions made on the basis of this article.

Author of Global Insight Group Intelligence:

Michaela Schaaf-Hoffelner has over 35 years of experience in strategic and technical project and product management – especially in the areas of IT, control technology and intralogistics. Through her many years of work on complex systems, she recognizes structural risks and breaks in the dynamic fitthat are often overlooked in classical analyses.

Your focus is on Causal connections and systemic dependencies to make them visible and in concrete Strategic Benefits to translate for investors and decision-makers. Their analyzes combine deep technical understanding of the system with geopolitical and economic developments.

Der Beitrag Iran war and oil price shock: who wins and who really loses? erschien zuerst auf Schaaf.

Oil as a Weapon: Why Energy Dominates Geopolitics and Markets in 2026

Global Insight Group — Sun, 11 Jan 2026 10:56:00 +0000

January 11, 2026

Introduction: Why This Analysis Goes Beyond the Headlines

Anyone following the current headlines on Ukraine, Venezuela, Greenland, Iran, sanctions and tariffs may perceive an increasingly chaotic geopolitical environment.

Individual events appear to exist alongside one another without any clear connection, driven by escalation, political rhetoric and short-term policy decisions.

This analysis deliberately begins one level deeper.

For broader context on current geopolitical and energy developments, see Reuters: Global Geopolitics and Energy.

The central thesis is:

In 2026, oil is no longer an ordinary commodity. It has become a strategic instrument of power.

For background on the role of energy as a geopolitical lever, see the U.S. Energy Information Administration: Energy and Geopolitics.

The decisive factor is not the oil price itself. What matters is control over production, transportation, insurance, financing and political protection.

Those who can influence these layers can also influence markets, governments and their political room for manoeuvre.

Oil as a Weapon, Not Merely a Price Variable

Public discussion usually reduces oil to a single number: the price per barrel.

For geopolitical actors, however, another factor is far more important.

Oil is a system asset consisting of several interconnected layers:

Production: Who is permitted to produce oil, and under what political conditions?
Transportation: Which routes are used to bring oil to the market?
Insurance: Which shipments can still be insured?
Financing: In which currency, through which banks and on which markets is oil traded?
Political protection: Which governments guarantee security across the supply chain?

As soon as one of these layers comes under pressure, markets begin to react, often long before any physical supply disruption occurs.

This can be observed, for example, in rising war-risk insurance premiums in the Gulf region, as documented by Reuters: Middle East War-Risk Insurance.

Why the Middle East Is the Central Lever

The Middle East is not primarily a religious or cultural epicentre of global politics. It is a critical energy junction.

At the centre of this system is the Strait of Hormuz, described by the U.S. Energy Information Administration as a critical energy chokepoint.

The narrow waterway carries:

approximately 20 million barrels of oil per day, equivalent to around 20% of global petroleum-liquids consumption
a significant share of globally traded liquefied natural gas, or LNG

The critical point is that the expectation of disruption alone can change prices, insurance premiums and transportation costs.

A formal blockade is not required.

The strategic term for this type of location is chokepoint.

A chokepoint is a narrow passage that cannot easily be bypassed and whose disruption creates disproportionately large consequences.

Hormuz is a classic example, as discussed in the EIA analysis of global oil chokepoints.

Why Today’s Crises Are Strategically Connected

At first glance, the events of recent months may appear unrelated:

prolonged negotiations over Ukraine
US intervention in Venezuela
the debate surrounding Greenland
heightened Israeli alert regarding Iran
the US military presence in Syria

From a strategic perspective, however, these developments can be interpreted as elements of a common pattern.

For a comparative overview of current crises, see Reuters: Geopolitical Risk Overview.

The underlying pattern is:

Power projection across the global energy architecture.

This does not require the existence of a single master plan.

It is better understood as a portfolio logic:

Russia remains militarily and economically tied down.
China remains dependent on energy imports and transportation routes.
Europe bears a substantial share of the resulting energy and inflation costs.
The United States preserves strategic options instead of committing itself too early.

Venezuela, Greenland and Iran: Different Arenas, the Same Logic

Venezuela

For background on Venezuela’s oil reserves, see the EIA Country Analysis for Venezuela.

Venezuela possesses the world’s largest proven oil reserves.

Political changes in the country influence markets less through current production volumes than through future expectations regarding supply and investment.

Markets react to the question of who will gain access to these reserves in the future, not simply to today’s export figures.

Greenland

For context on the Arctic and emerging shipping routes, see Reuters: Arctic Shipping Routes.

Greenland is less about the immediate extraction of oil or natural gas and more about control over routes and infrastructure.

As climate change extends ice-free periods across Arctic waters, new shipping routes become increasingly economically viable.

States with a strong presence in the region may gain influence over future energy and transportation corridors between North America, Europe and Asia.

Iran

For current risk analysis concerning Iran and the Strait of Hormuz, see Reuters: Iran and Gulf Tensions.

Iran sits indirectly at the world’s most important energy bottleneck.

Political instability, threats or limited military operations may be sufficient to create a global energy-risk premium with consequences across international markets.

The Real Dynamic: Expectations Move Markets

A common analytical mistake is to assume that prices move only after actual supply disruptions occur.

In reality, the opposite is often true:

Insurers increase war-risk premiums.
Shipping companies avoid certain routes or demand additional charges.
Traders incorporate risk into futures contracts.
Governments respond politically to rising prices.

This entire chain can unfold without a single tanker being destroyed or a port being closed.

Historical and current examples can be found in Reuters reporting on commodity markets and geopolitical risk.

What This Means for Europe

Europe is one of the world’s largest energy importers and is particularly vulnerable to geopolitical energy-risk premiums.

The consequences include:

higher inflation caused by energy prices
rising industrial production costs
growing political pressure due to higher living costs
increasing security-policy dependency

Europe therefore operates less as an independent strategic actor and more as a buffer zone within global energy and power conflicts.

For analysis of the relationship between energy imports, inflation and European economic policy, see the European Central Bank Research Bulletin.

Conclusion: Why Oil Overshadows Everything Else in 2026

The central insight is clear:

Energy flows, rather than tank movements alone, determine power, stability and political room for manoeuvre.

Oil acts as an amplifier:

for geopolitical conflicts
for economic imbalances
for political instability

Those who analyse current events in isolation will miss this connection.

Those who understand oil as a strategic power asset can see why the Middle East overshadows almost every other geopolitical issue in 2026, even when no formal war has been declared.

Q&A: Frequently Asked Questions About Oil as a Weapon

Why Do Markets Often React to Rumours or Threats?

Energy markets are heavily influenced by expectations.

Insurers, logistics providers and financial institutions price in potential risks in advance to reduce possible losses.

This precaution is immediately reflected in prices.

For further market context, see Reuters: Market Pricing of Geopolitical Risk.

Why Is the Strait of Hormuz More Important Than Individual Oil Fields?

Individual oil fields can sometimes be replaced or their output compensated for elsewhere.

A chokepoint such as the Strait of Hormuz is far more difficult to replace.

A disruption would simultaneously affect numerous producing countries and importing markets.

For background information, see the EIA analysis of the Strait of Hormuz.

Do Oil-Exporting Countries Such as Russia Not Benefit from High Oil Prices?

In the short term, they do.

Over the longer term, however, Western governments attempt to reduce export revenues and profit margins through sanctions as well as transportation, financing and insurance restrictions.

For related reporting, see Reuters: Sanctions and Oil Trade.

Why Is Europe Particularly Exposed?

Europe imports most of the energy it consumes.

Higher geopolitical risk premiums therefore affect inflation, industrial competitiveness and political stability directly.

For further analysis, see the European Central Bank: Energy Prices and Inflation.

Is This Article About Investing in Oil?

No.

The focus of this article is on geopolitical power structures and the ways in which they may affect individual asset classes.

It does not constitute investment or financial advice.

Internal Links and Further Analysis

Readers who would like to explore individual aspects of this analysis in greater depth may find the following related articles useful.

Oil and Geopolitics

Europe and Energy Dependency

Russia, China and Rare Earths

China Tightens Its Grip on Critical Raw Materials as the US Faces Pressure on Multiple Fronts: What Does This Mean for Europe?

These internal links provide additional context and allow readers to examine each strategic issue independently.

Sources and Further Analysis

The assessments in this article are based on publicly available analyses and reporting from established institutions and media organisations.

The following sources provide important background information.

Reuters: Energy, Markets and Geopolitics

https://www.reuters.com/markets/commodities

https://www.reuters.com/world

U.S. Energy Information Administration

Energy geopolitics and chokepoints, including the Strait of Hormuz:

https://www.eia.gov/todayinenergy/detail.php?id=65504

https://www.eia.gov/todayinenergy/detail.php?id=45536

EIA: Country Profiles and Reserves

Venezuela’s oil reserves and production structure:

https://www.eia.gov/international/analysis/country/VEN

Reuters: Middle East and Iran

https://www.reuters.com/world/middle-east

European Central Bank

Energy prices, inflation and their economic impact on Europe:

https://www.ecb.europa.eu/pub/economic-research/resbull/html/index.en.html

These sources provide context for geopolitical and economic developments. They do not replace an individual risk assessment or investment analysis.

Notice: This article is intended to provide geopolitical and economic analysis. It does not constitute investment or financial advice.

Author of Global Insight Group Intelligence:

Der Beitrag Oil as a Weapon: Why Energy Dominates Geopolitics and Markets in 2026 erschien zuerst auf Schaaf.

🇨🇳 China Tightens Its Grip on Critical Raw Materials as the 🇺🇸 US Faces Pressure on Multiple Fronts: What Does This Mean for 🇪🇺 Europe?

Global Insight Group — Wed, 15 Oct 2025 09:13:44 +0000

October 15, 2025

Imagine the following scenario: fully assembled electric vehicle motors are sitting on a factory floor – but they do not turn. No magnets. No propulsion.

The United States is attempting to contain pressure on four fronts: Russia, China, Iran and the instability spreading across the Middle East.

And China? China is turning a barely visible valve – rare earth elements, magnet exports and refining capacity – and steadily tightening the flow.

Europe is standing in the slipstream of this raw-material storm. Without an airbag. Without independent supply lines.

Key question: Who will control our motors – and our security – tomorrow?

1) The Silent Blade: Rare Earth Elements as Strategic Leverage

Rare earth elements, or REEs, are not exotic technological curiosities. They are the arteries of the modern technology and defence industries.

The group comprises 17 elements, including neodymium, dysprosium and terbium. They are used in electric motors, drones, radar systems, wind turbines and fighter aircraft.

These elements are extremely difficult to replace because they combine magnetic properties that other materials cannot provide in the same way: strength, low weight and resistance to high temperatures.

However, the core problem is not their geological availability. It is their processing.

The real power lies in refining.

China controls more than 80% of global refining capacity and therefore dominates the entire value chain – from separation and processing to magnet production.

Over recent decades, the United States, Japan and Europe closed many of their own facilities for cost reasons. They now lack viable alternatives.

China is currently tightening its approval procedures for magnet exports dramatically.

This means that every gram of exported magnetic material may require official approval – and can potentially be blocked.

The consequences could be severe: delivery times increase sharply, prices rise and factories in Europe may be forced to suspend production.

Thesis: If China reduces magnet production, military manufacturing is likely to be prioritised over civilian production. This could mean that electric vehicle or wind turbine production is halted in favour of defence programmes.

⚔️ 2) Ukraine as a Material Trap: Attrition as Strategy

Russia is playing for time. Its strategy is based on attrition rather than speed.

Every additional week of war costs Western countries billions.

China and North Korea are reportedly supplying Moscow with ammunition, components and spare parts. Russia is therefore increasing its ability to sustain the conflict, while Western countries continue to consume material resources.

Europe is rebuilding its defence industry, but capacity quickly encounters structural limits. Intermediate products are missing – particularly high-performance magnets, sensors and semiconductors.

Every artillery shell, tank and missile requires components that depend on rare earth elements. When these components are unavailable, even substantial defence budgets cannot solve the problem.

Key question: Which will last longer – the budget or the supply chain?

Consequence: The war in Ukraine is therefore not only a military conflict. It is also an economic war of attrition. Russia is attempting to exhaust Western inventories, financial resources and political patience – and China benefits indirectly from this process.

📽️ Video: China Tightens Its Grip on Critical Raw Materials as the US Faces Pressure on Multiple Fronts

🎬 No Tracking? You can watch the Video directly on YouTube: 🇨🇳 China Tightens Its Grip on Critical Raw Materials as the US Faces Pressure on Multiple Fronts: What Does This Mean for Europe?

3) Oil as Oxygen: Strategy Within the Global Petroleum Network

Oil is the lifeblood of the economy. Without it, almost everything comes to a standstill.

While the United States has its Strategic Petroleum Reserve, or SPR – a national oil reserve designed to stabilise energy markets during short-term disruptions – China is preparing for the longer term.

Beijing is quietly expanding its oil and gas inventories.

China’s objective is to become sufficiently independent during a global crisis to operate for weeks or even months without Western supplies – while simultaneously gaining greater influence over market prices.

The war in Gaza is increasing the pressure. Tanker routes are becoming riskier, insurance costs are rising and crude oil prices are experiencing significant volatility.

If China uses its oil reserves strategically, it could create a two-sided pressure mechanism against Western economies:

Price leverage: Through targeted market activity, China can influence prices or apply pressure to Western economies.

Supply squeeze: If China accumulates additional reserves, less oil remains available on global markets. Prices may rise before a conflict has even escalated.

Term explained: The Strategic Petroleum Reserve, or SPR, is the United States’ government-controlled emergency oil stockpile. It is intended to act as a buffer during supply disruptions.

Consequence: Oil becomes more than an economic commodity. It becomes a strategic weapon. Whoever controls the reserves can influence the stability of entire economies.

4) Taiwan: The Exposed Nerve – and the Potential Collapse of the Technology Supply System

Taiwan is the centre of global microchip production.

More than 60% of the world’s semiconductors and over 90% of its advanced chips are manufactured there – primarily by TSMC, the world’s largest semiconductor foundry.

Without these chips, smartphones, vehicles, aircraft and weapons systems cannot function.

Any military or political escalation surrounding Taiwan could interrupt the flow of this critical technology.

Even a Chinese military exercise, blockade or attack affecting Taiwanese supply chains could destabilise the global economy.

China’s strategic leverage does not arise solely from its military threat. It also comes from the ability to influence shipping routes, insurance markets and freight costs.

As risk increases, prices rise. Western manufacturers pay twice: once through higher transport costs and again through the loss of semiconductor supplies.

Question: Can Washington protect Taiwan without technologically draining Europe?

Consequence: A crisis surrounding Taiwan would affect Europe far more severely than many decision-makers assume – not primarily in military terms, but industrially.

Every automotive manufacturer, defence company and energy technology provider depends on these chips.

☢️ 5) Iran and the Nuclear Grey Zone: Between Deterrence, Energy and Supply Chains

Iran is operating within a dangerous grey zone.

It continues to enrich uranium while remaining just below recognised weapons-grade capability.

An Iranian missile or drone could potentially be interpreted as a nuclear threat – even if it carries only a conventional payload.

This dual-use uncertainty – the possibility of either civilian or military application – increases the risk of misinterpretation and escalation.

However, Iran’s influence extends far beyond its nuclear programme:

Energy prices: As an OPEC+ member and a major actor in the Persian Gulf, Iran can influence global oil prices. Attacks or blockades in the Strait of Hormuz could significantly disrupt oil flows.
Supply chains: Approximately 20% of global oil shipments and a substantial proportion of liquefied natural gas transportation pass through the strait. A single serious incident could sharply increase global energy and transport costs.
Geopolitical relationships: Through its relationships with Russia, China and allied militias across the Middle East, Tehran can use regional tensions to disrupt Western trade routes or destabilise markets.

Consequence: Every exchange of fire between Iran and Israel, every drone attack against a tanker and every new sanction imposed on Tehran acts like a needle striking the global economic system.

Commodity prices rise, insurers increase their premiums and supply chains – particularly those dependent on the Suez Canal – come under growing pressure.

Logic: More pressure → more covert programmes → higher energy prices → deeper global uncertainty.

6) The Invisible War: Information, Finance and Sanctions

Modern wars are not fought only with weapons. They are also fought through information, data, financial systems and supply chains.

This new form of conflict often remains invisible, but its effects can be devastating.

Information Warfare

Disinformation campaigns, fabricated news and AI-generated content manipulate public opinion and weaken democratic societies from within.

When people no longer know which sources they can trust, every decision – political or economic – becomes more uncertain.

Financial Warfare

Sanctions, frozen accounts and exclusion from the SWIFT system are modern strategic weapons. They can paralyse entire economies.

However, every sanction creates secondary effects. Targeted countries develop alternatives, including China’s CIPS system and bilateral trade agreements settled in national currencies.

This process creates parallel financial structures that gradually weaken the Western-dominated system.

Term explained: SWIFT is the global messaging network used by banks to process international financial transactions. If a country is excluded, it effectively loses access to a substantial part of the global economy.

⚙️ Economic Warfare

Export restrictions, tariffs and supply suspensions destroy trust between states.

Companies are suddenly forced to create new supply chains – often at greater cost and with lower efficiency.

Consequences:

Costs rise because materials must be transported through longer routes or sourced from alternative suppliers.
Planning certainty declines as projects become more expensive and investors become more cautious.
Political polarisation increases because economic uncertainty divides societies.

Europe is positioned at the centre of this invisible conflict. It is vulnerable because of its open economy, yet simultaneously dependent on global stability.

If financial and information systems continue to fragment, Europe risks becoming trapped between two competing worlds: too interconnected to remain neutral, but too dependent to act independently.

7) Europe Between the United States and China – Without an Airbag

Europe is balancing on a geopolitical tightrope.

Its security guarantee comes from the United States. A significant share of its industrial supply base comes from China.

The two major powers are moving in opposing directions – and Europe is caught between them.

Pressure from the United States

Washington expects loyalty in military, political and economic matters.

In practice, this means:

higher defence expenditure;
participation in sanctions against China;
continued dependence on US technologies, including cloud infrastructure, semiconductors and artificial intelligence.

However, these measures often affect European industry first.

For example, a sanctions package targeting China may immediately harm German machinery manufacturers or automotive suppliers – long before it creates substantial pressure on Beijing.

Dependence on China

Europe sources 98% of its rare earth elements from China, along with solar cells, batteries, electronics and chemicals.

An export suspension could endanger the energy transition and disrupt entire industrial sectors.

China understands this dependency – and uses the resulting leverage with surgical precision.

Term explained: “Rare earth elements” are a group of 17 chemical elements that are essential for high-technology products – from wind turbines and electric vehicles to missile guidance systems.

A Divided Strategic Identity

Europe wants to act as a normative power, manufacture sustainably and achieve strategic independence.

Yet without secure access to energy, raw materials and military protection, these objectives are extremely difficult to realise.

The result is a permanent strategic balancing act: economically connected to China, dependent on the United States for security, but lacking a coherent independent strategy.

Consequences:

Industrial relocation: Companies move production to countries offering more stable conditions, including the United States.
Social pressure: Unemployment and rising energy prices place additional strain on the middle class.
Political fragmentation: Eastern European countries align more closely with the United States, while Southern European countries seek stronger economic ties with China. Internal divisions within the EU increase.

Example: If France actively attracts Chinese investors while Poland expands US military infrastructure, two competing models for Europe’s future collide.

The central question is therefore unavoidable:

Does Europe want to remain a geopolitical playing field – or become a strategic player again?

8) Scenarios: What Could Happen Next?

Scenario 1 – Controlled Escalation

China gradually restricts exports, while Western governments respond in a measured manner.

New refining facilities, recycling programmes and supply agreements with countries in Africa, South America and Australia are developed across Europe and the United States.

The transition takes years, but companies learn to use rare earth elements more efficiently and reduce unnecessary consumption.

This scenario requires endurance but ultimately allows stabilisation. Industry suffers, but it does not collapse.

Scenario 2 – Raw-Material Shock

China abruptly activates comprehensive export restrictions.

Export bans hit high-technology and energy industries in the middle of active production cycles.

Defence projects are prioritised, while civilian manufacturing is suspended.

Prices for magnets, semiconductors and batteries rise sharply.

Europe experiences shortages affecting automotive production, wind energy and electronics manufacturing.

Political pressure increases, resulting in emergency legislation, priority allocation systems and direct government intervention.

Scenario 3 – Formation of Competing Economic Blocs

The global economy divides into two major systems:

East: China, Russia, Iran and BRICS-aligned states
West: The United States, the European Union and Japan

Supply chains are reorganised and global cooperation declines.

Europe faces a historic strategic decision:

Does it remain firmly aligned with NATO while potentially losing industrial capacity – or does it attempt to establish an independent position between the blocs?

This scenario carries enormous political and social risk and could challenge prosperity and security simultaneously.

9) Early-Warning Indicators

The following indicators can reveal whether a geopolitical raw-material conflict is intensifying.

They can help businesses, investors and policymakers identify developments before they become acute:

Longer approval periods for Chinese magnet exports or processing equipment: This may indicate that Beijing is tightening restrictions further.
Rising prices for neodymium, praseodymium and dysprosium: An early sign of market scarcity.
Declining oil reserves in the United States combined with growing reserves in China: This may indicate asymmetric preparation for future crises.
Expanded North Korea–Russia cooperation: Evidence of weapons or ammunition deliveries would demonstrate that alternative supply networks in the East are functioning.
EU programmes for rare-earth recycling and magnet manufacturing: The speed of implementation reveals whether Europe is taking the threat seriously.

Consequences: If several of these indicators emerge simultaneously, a shortage cycle becomes increasingly likely.

Prices rise, delivery times increase dramatically and governments begin stockpiling strategic materials.

This could trigger a new wave of economic uncertainty – from higher energy costs to broader inflationary pressure.

10) What Europe Can Do

Europe is facing a strategic test.

If China controls the global raw-material valve, Europe must learn to act more independently.

This does not require complete autarky. It requires sovereignty through resilience.

Support European refining and magnet productionEurope can only reduce its dependence on Chinese processing by rebuilding its own industrial capabilities. Joint projects involving Germany, France and the Nordic countries could provide a starting point.
Establish strategic reserves of rare earth elementsJust as oil reserves can stabilise markets during a crisis, strategic REE reserves could prevent production disruptions in critical industries.
Expand recycling at an industrial scaleDecommissioned wind turbines, electric vehicles and electronic products contain significant quantities of recoverable materials.These circular material flows must be used commercially and systematically – not treated merely as public-relations initiatives.
Regulate dual-use technologies clearlyTechnologies that can be used for both civilian and military purposes must not be exported without effective controls. Otherwise, Europe loses strategic oversight of its own technological capabilities.
Define industrial prioritiesEurope should determine in advance which sectors would receive priority access to scarce materials during a crisis – for example defence, energy and healthcare.Without predefined allocation rules, shortages could result in political and operational chaos.
Invest in knowledge and researchMaterials science and recycling technologies require substantial investment.Without its own skilled workforce and specialist expertise, Europe will remain dependent on external powers.

Consequences of Inaction

If current policies remain unchanged, Europe risks a double loss of control – technological and economic.

Production capacity will migrate abroad, jobs will disappear and Europe’s vulnerability to political coercion will increase.

A stable future therefore requires a clear decision:

Raw-material sovereignty now – or dependency for decades.

11) Conclusion – The Unresolved Strategic Question

While Washington focuses on deterrence and Beijing calibrates access to critical resources, Europe’s future will not be decided in political speeches.

It will be decided on factory floors.

Whose components will we use to build our freedom tomorrow?

And what value does nuclear deterrence have if we lack the materials required to preserve peace?

Sources

Credits

“The heads of state of the BRICS countries on June 28, 2019, in Osaka, Japan.

From left to right: Xi Jinping, General Secretary of the Chinese Communist Party, Vladimir Vladimirovich Putin, President of Russia, Jair Bolsonaro, President of Brazil, Narendra Modi, Prime Minister of India and Cyril Ramaphosa, President of the Republic of South Africa.”

Original image on Wikimedia Commons, by Alan Santos/PR, licensed under CC BY 2.0. No modifications.

“Viatura Blindada Escola (VBE)—Leopard 1 A5 BR and Viatura Blindada de Combate Antiaérea (VBC AAe) Gepard 1A2.”

Original image on Wikimedia Commons, by 1º Regimento de Carros de Combate (1º RCC), licensed under CC BY-SA 4.0. No modifications.

Der Beitrag 🇨🇳 China Tightens Its Grip on Critical Raw Materials as the 🇺🇸 US Faces Pressure on Multiple Fronts: What Does This Mean for 🇪🇺 Europe? erschien zuerst auf Schaaf.

Blackout Bombs and EMP Weapons: How China, Russia & Co. Are Turning the Power Grid into a Weapon ⚡

Global Insight Group — Tue, 07 Oct 2025 11:06:00 +0000

Updated: July 3, 2026

Blackout Bombs and EMP Weapons: The New Way to Paralyze Entire States

What happens when the lights go out — not by accident, but by design? In modern warfare, power grids and communication systems have long become part of the battlefield. More and more states are developing technologies that do not cause explosions, but simply switch off the power. That may sound like science fiction, but it is real.

📽️ Video: Insider: Blackout bombs: What the hell is China planning now? 😳

🎬 No tracking? You can watch the video directly on YouTube: Insider: Blackout-Bomben: Was zur Hölle plant China jetzt? 😳

USA – The Pioneers of Graphite and EMP Bombs

The United States was the first country to develop and deploy so-called graphite bombs. The best-known example is the BLU-114/B, a special bomb that disperses fine graphite fibers over substations. These fibers cause short circuits, leading to the collapse of power grids.

It was first used in the 1991 Gulf War against Iraq, and later in 1999 in Yugoslavia. The result: temporary outages affecting up to 85 percent of the national power supply (globalsecurity.org).

In addition, the United States possesses advanced EMP weapons (Electromagnetic Pulse). These generate massive voltage surges in electronic systems through targeted electromagnetic discharges. In recent years, the U.S. military has tested both nuclear EMP capabilities and non-nuclear directed-energy sources designed to disable critical infrastructure.

American EMP Cruise Missile CHAMP

China – The New Player with Global Ambitions

In June 2025, China publicly presented its own graphite bomb for the first time, developed by the China Aerospace Science and Technology Corporation. According to official information, the weapon has a range of 290 kilometers and can disable an area of at least 10,000 square meters. A CCTV video showed how power grids can be deliberately switched off (firstpost.com).

Beyond that, China is working on EMP technologies that operate both conventionally — non-nuclear — and through high-energy microwaves. In the event of a conflict, such systems could disable satellites, communication centers and power grids.

Russia – Electronic Warfare at the Highest Level

Russia relies less on physical bombs and much more on electronic warfare (EW) and EMP capabilities. Systems such as Krasukha-4 or Leer-3 can disrupt GPS signals, drones and communication. This can also indirectly affect power grid control systems and energy infrastructure.

Russia is also working on nuclear EMP weapons that could electrically paralyze large areas through high-altitude explosions (HEMP). In official doctrines, such an attack is considered a strategic option against NATO systems. Sources: rusi.org, swp-berlin.org

Executive Risk Intelligence Briefing

Iran’s Proxy Network as a Business Risk

What decision-makers should watch now — before proxy escalation becomes a cost, compliance or supply-chain shock.

Energy prices, Hormuz and maritime chokepoints
Sanctions, shadow fleets and compliance exposure
Early-warning indicators for procurement, logistics, treasury and strategy
Executive Risk Questions for internal briefings and board-level decisions

PDF Briefing 17 pages Business Risk Intelligence GFDD Framework™

Iran – Asymmetric Threat with EMP and Cyber Weapons

Iran is working on non-nuclear EMP weapons and combines them with cyberattacks. State-backed groups such as the IRGC Cyber Units and CyberAv3ngers specifically target power and water systems abroad.

Reports suggest that Iran may even have used balloons or missiles for high-altitude EMP tests. Such systems could theoretically plunge entire regions into darkness (jpost.com).

Russian Leer-3

North Korea – Small Means, Major Impact

North Korea has been developing nuclear EMP capabilities for years, which could be used against South Korea or the United States in the event of conflict. According to estimates, the country has missiles capable of delivering EMP warheads into the high atmosphere.

At the same time, the regime relies on cyber operations to infiltrate energy and communication networks. Groups such as Lazarus are already known for attacks on banks and power plants (congress.gov).

Israel – Defensive Superpower with Offensive Capabilities

Through Unit 8200, Israel has one of the most advanced cyber and EW units in the world. Systems such as Scorpius can block or manipulate communication and radar systems. Although Israel does not officially possess EMP weapons, it is capable of simulating or defending against such technologies (baesystems.com).

📽️ Video: Insider-analysis: Blackout as a weapon: The Underestimated Threat of Graphite and EMP Technologies

🎬 No tracking? You can watch the video directly on YouTube: Insider-Analyse: Blackout als Waffe: Die unterschätzte Gefahr durch Graphit- und EMP-Technologien

Europe and NATO States

Countries such as the United Kingdom, France, Germany and South Korea are investing in electronic warfare (EW) and cyber defense to protect themselves against EMP attacks. The United Kingdom in particular operates joint programs with the United States to develop non-lethal high-energy weapons that can be used for both defense and attack. Source: baesystems.com

Conclusion – The Invisible Front Line

The war of the future is quiet, invisible and electric. Whoever controls the power grid controls everything: communication, transport, supply and defense.

China, Russia, the United States and Iran clearly show that power grids are no longer purely civilian structures, but strategic targets. A single targeted EMP or graphite attack can affect millions of people — without a single shot being fired.

The world is entering a new era of warfare: it is not the loudest explosion, but the sudden blackout that determines power or powerlessness.

Global Power Shifts | Strategic Risk Intelligence

Mecca Pact & China: A New Power Order in the Middle East?

The Mecca Pact Is Changing the Strategic Equation

From Containment to Integration?

China Between Washington and Tehran

The Hidden Power Game

Further Reading

U.S. Treasuries: Can War Offer a Way Out of the Debt Trap?

Are U.S. Treasuries Already in Crisis?

Foreign Governments Are Reducing Their U.S. Treasury Holdings

Why Japan Could Become the Turning Point

America’s Escape Routes Are Narrowing

Lower Inflation

Lower Government Debt

Strong, Non-Inflationary Growth

New Buyers

Bessent’s Treasury Buybacks: Stabilisation Tool or Hidden Warning Signal?

War as an Escape Route or an Accelerant?

Scenario 1: A Rapid U.S. Victory

Scenario 2: A Permanent War of Attrition

Scenario 3: An Uncontrolled Multi-Front Shock

Further Readings

Ukraine and Iran: Trump’s Two-Front War of Attrition?

What is really happening right now?

Ukraine and Iran are drawing on the same US weapons stockpiles

The real problem is not stockpiles but replenishment

China does not need to fight this war itself

Rare earths hit the US defense industrial base at a vulnerable point

Investment Implications

Is this America’s two-front war of attrition?

Further reading

Iran War: How the West Is Fighting While Losing Its Dominance

1. Iran War 2026: Why Tehran Remains a Regional Power Despite the Attacks

2. Saudi Arabia, Türkiye and Pakistan: A New Regional Security Architecture Emerges

3. Strait of Hormuz: From Maritime Chokepoint to Institutional Power

4. Hormuz, Bab el-Mandeb and Suez: Chokepoints Are Becoming Part of a Regional Security System

5. While Washington Fights, Economic Power Is Shifting East

Nine Indicators to Watch: How to Test the Power-Shift Hypothesis

Frequently Asked Questions About the Iran War and the Emerging Power Order

Is the West Losing the Iran War?

Is the New Saudi-Turkish-Pakistani Defence Pact Directed Against Iran?

Why Is Türkiye’s Role as a NATO Member So Important?

What Role Does Pakistan Play?

Could Iran Charge Transit Fees in the Strait of Hormuz?

Does This Mean the End of the Petrodollar?

What Role Does China Play in the Iran War?

Further Reading

Energy Weapon Explained: What Are Directed Energy Weapons?

What are Directed Energy Weapons?

Why Hegseth’s Golden Dome statement matters

How do Directed Energy Weapons work?

High-energy lasers

High-power microwaves

Why Directed Energy Weapons are becoming strategically important

Why Golden Dome is also controversial

What Directed Energy Weapons can do – and what they cannot do

Why this matters now

Geo-Radar Assessment

Iran’s Proxy Network as a Business Risk

Q&A: Directed Energy Weapons

What are Directed Energy Weapons?

Are Directed Energy Weapons real?

What is the difference between laser weapons and microwave weapons?

Why are Directed Energy Weapons important for drone warfare?

Did Pete Hegseth say Golden Dome used directed energy?

Are Directed Energy Weapons a complete replacement for missiles?

Why does this matter geopolitically?

Further Readings:

Iran’s Proxies: The Hidden Escalation Map of the Middle East

Why Iran’s Proxies Matter

Lebanon: Hezbollah as the Strongest Node

Iraq: Militias Between State, Politics and Shadow Power

Syria: The Damaged Corridor

Yemen and the Red Sea: The Maritime Lever

Does Iran Control Everything Directly?

Israel, the United States and Turkey: Counter-Power Without the Same Model

The Hidden Layer: Oil, Money and Routes

Conclusion: The Next Escalation May Not Start Where Everyone Is Looking

Iran’s Proxy Network as a Business Risk

Q&A: Frequently Asked Questions About Iran’s Proxies

GFDD Diagnostics™
Intelligence on Demand

Turn Complex Risk Signals Into
Strategic Clarity – Before Weak
Signals Become Expensive Decisions.