# A New Middle East Is Emerging From the Iran War

An episode of [Big Take](https://invisiblenetwork.ai/podcast/1578096201), 13 Jul 2026, 15 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/825d4e29-b616-46f4-afd7-ae2b0013005c/ddade724-0f4e-469f-8926-b4860149132b/audio.mp3?utm_source=Podcast&in_playlist=8b1dd624-a026-43e9-8b57-ae2b00130066

The last few days have brought a flurry of developments in the Iran war. As armed hostilities between the US and Iran resumed over the weekend, news broke that US Senator Lindsey Graham had died. Graham was a staunch supporter of Israel and of the war in Iran. And on Monday, President Trump declared US control over the Strait of Hormuz and demanded a 20% reimbursement rate for all cargo that moves through the waterway. It’s not clear when the war with Iran will end. But when it does, the balance of power in the Middle East will look very different than it did before Hamas attacked Israel on October 7, 2023. On today’s Big Take podcast, Bloomberg’s Peter Martin joins host David Gura to discuss the new alliances, revised trade routes and expanded battlefields that are reshaping the Middle East. We have a special Bloomberg subscription offer for podcast listeners at Bloomberg.com/podcastoffer. Hosted by David Gura; Produced by Laura Newcombe; Reported by Peter Martin; Edited by Nicole Beemsterboer. Fact-checking by Victor Swezey; Engineering by Alex Suguira. Senior Producer: Naomi Shavin; Deputy Executive Producer: Julia Weaver. Executive Producer: Nicole Beemsterboer. See omnystudio.com/listener for privacy information.

## Transcript

[0:00] Speaker 1: Bloomberg Audio Studios, podcasts, radio news. The Middle East has
[0:10] Speaker 1: changed dramatically since Hamas attacked Israel on October seventh, twenty
[0:13] Speaker 1: twenty three, and the war with Iran has brought about
[0:17] Speaker 1: even more dramatic shifts across the region.
[0:19] Speaker 2: There was so much at play.
[0:22] Speaker 1: Bloomberg's Peter Martin, one of our Middle East correspondents, looked
[0:25] Speaker 1: at how one day highlights those changes. March thirty first,
[0:29] Speaker 1: twenty twenty six.
[0:30] Speaker 2: There was a a Kuwaiti tank it had been hit
[0:33] Speaker 2: by an Iranian strike, that was sort of blazing in
[0:36] Speaker 2: the Straits of horm Moose. Trump on that same day
[0:39] Speaker 2: was berating European allies for refusing to help open the
[0:43] Speaker 2: Strait of horn Moos. Israel was expanding its presence on
[0:46] Speaker 2: the battlefield in Lebanon and beyond. Dubai was under direct
[0:50] Speaker 2: attack from Iranian missiles and drunes.
[0:53] Speaker 1: And on that day, thousands of miles away from the
[0:56] Speaker 1: United Air of Emirates in the UK, then Prime Minister
[0:59] Speaker 1: curest Armor welcome serious new president Achmed al Shara to
[1:03] Speaker 1: ten Downing Street. He's a former al Qaeda commander.
[1:06] Speaker 2: And together it felt like that day kind of encapsulated.
[1:10] Speaker 2: The global consequences of the war, you know, an impact
[1:13] Speaker 2: on global shipping, higher energy prices, strained alliances, Israel's territorial expansion,
[1:20] Speaker 2: and subsequent diplomatic isolation.
[1:23] Speaker 1: Peter says that single day represents how much the Middle
[1:27] Speaker 1: East has been transformed. Alliances have shifted, battlefields have expanded,
[1:32] Speaker 1: and countries have had to redraw trade routes, and that
[1:36] Speaker 1: has left the public divided. I'm David Gura, and this
[1:42] Speaker 1: is the big take from Bloomberg News today on the show.
[1:45] Speaker 1: As a fragile ceasefire between the US and Iran falls
[1:48] Speaker 1: apart and its technical talks are enveloped in uncertainty, a
[1:52] Speaker 1: look at what war has meant for the wider region
[1:55] Speaker 1: and the world. How much has the Middle East changed
[2:04] Speaker 1: since a Maas attacked is on October seventh, twenty twenty.
[2:06] Speaker 2: Three, and then the region has been through a pretty
[2:09] Speaker 2: profound transformation. Conflict has spread from Israel into Gaza and
[2:16] Speaker 2: then all across the region Lebanon, Syria, Yemen, Iran, and
[2:20] Speaker 2: now in this most recent round of fighting, all across
[2:23] Speaker 2: the Golf States as well. During that period, Israel has
[2:27] Speaker 2: emerged stronger militarily, but perhaps more isolated than ever Politically,
[2:32] Speaker 2: Iran's proxy network has been battered and weakened, but it
[2:36] Speaker 2: has retained significant leverage over the global economy. And the Gulf,
[2:41] Speaker 2: which for so long seemed insulated from turbulence in the
[2:44] Speaker 2: Middle East, has really lost a lot of that sense
[2:46] Speaker 2: of insulation and feels much more at risk than ever before.
[2:50] Speaker 1: When we talk about a place changing, what's changed exactly.
[2:52] Speaker 2: One of the things that we've seen breakdown is any
[2:56] Speaker 2: sense of Golf unity. Saudi Arabia before or October seventh,
[3:01] Speaker 2: was moving toward normalization with Israel, perhaps some kind of
[3:05] Speaker 2: Abraham Accord style agreement that really is for the moment
[3:11] Speaker 2: off the table, given public perceptions in Saudi Arabia, elite
[3:14] Speaker 2: perceptions of what Israel has done in Gaza with more
[3:18] Speaker 2: than seventy thousand Palestinians killed, and you know, strikes across
[3:23] Speaker 2: the region, including an Israeli strike in Kata which was
[3:27] Speaker 2: extremely controversial, and the UAE has taken a completely different part.
[3:33] Speaker 2: It's aligned itself much more closely with the United States
[3:36] Speaker 2: and with Israel, and we've really seen the region kind
[3:39] Speaker 2: of fold into two different opposing camps. That's a profound
[3:44] Speaker 2: and I think probably lasting shift.
[3:46] Speaker 1: So our colleagues at Bloomberg Economics kind of analyzed how
[3:49] Speaker 1: attitudes and alliances have shifted over ten countries in the
[3:53] Speaker 1: Middle East. From that analysis, two countries emerged with the
[3:56] Speaker 1: most strained ties, and I don't think that's going to
[3:58] Speaker 1: surprise anybody or talking about Iran and Israel. So let's
[4:02] Speaker 1: start with Israel, and I wonder, Peter, how you would
[4:04] Speaker 1: characterize Israel's position in the Middle East today.
[4:08] Speaker 2: Yeah, you know, I think that Israel has emerged as
[4:12] Speaker 2: militarily stronger. It has dealt severe blows to Iran's proxy
[4:17] Speaker 2: network across the region, and in the Twelve Day War
[4:20] Speaker 2: and the most recent war with Iran, has even been
[4:23] Speaker 2: able to strike at Iran's own military capabilities on its
[4:28] Speaker 2: home soil, and to do that in lockstep with the
[4:31] Speaker 2: United States, which which in many ways is you know,
[4:34] Speaker 2: the high point of Netanyahu's career, something he's been building
[4:37] Speaker 2: towards for thirty years. But at the same time that's
[4:41] Speaker 2: come at a huge diplomatic cost for Israel. The country
[4:45] Speaker 2: is arguably more isolated than it's ever been. Its conduct
[4:50] Speaker 2: in its war in Gaza has damaged its relationship with Europe,
[4:54] Speaker 2: countries across the Global South, and much of the Arab world.
[4:58] Speaker 2: Regional partners also see Israel differently. So while the United
[5:02] Speaker 2: Arab Emirates has kind of doubled down on its close
[5:04] Speaker 2: relationship with Israel, Saudi Arabia, the largest player in the region,
[5:09] Speaker 2: has really taken pause and found it much more difficult
[5:13] Speaker 2: to get closer to the country. And you know, perhaps
[5:16] Speaker 2: most important of all, Israel's long standing special relationship with
[5:20] Speaker 2: Washington has come under string. Public opinion in the US
[5:23] Speaker 2: has shifted quite considerably, especially on the Democratic side, but
[5:27] Speaker 2: even inside Trump's space, and it's difficult to believe that
[5:32] Speaker 2: that doesn't represent quite a profound weakening of israel position
[5:36] Speaker 2: in its relationship with the US long term.
[5:38] Speaker 1: I want to get more into that contrast that you're
[5:40] Speaker 1: laying out between the UA's approach and Saudi Arabia's approach.
[5:44] Speaker 1: So we've talked about sort of the approach that the
[5:46] Speaker 1: UAE has taken. What has Saudi Arabia done in Kine,
[5:49] Speaker 1: How does its approach to Israel and the Middle East
[5:52] Speaker 1: more broadly differ from what the UA's has been.
[5:55] Speaker 2: Yeah, you know, before before October seventh, it looked like
[5:58] Speaker 2: there was something of a unified approach to what Israel
[6:02] Speaker 2: developing among the Gulf states, but October seventh really changed everything.
[6:08] Speaker 2: For the Saudi public and for Saudi politicians. That approach
[6:13] Speaker 2: became untenable as images of you know, Malnarish children of
[6:19] Speaker 2: strikes across Gaza, destruction and rubble across across the enclave
[6:25] Speaker 2: built up, and the Kingdom has moved away from that.
[6:28] Speaker 2: At the same time, the UAE has kind of made
[6:31] Speaker 2: the opposite choice. It's deepened intelligence and military cooperation with Israel,
[6:35] Speaker 2: and we've really seen the region rear liigne, with Saudi
[6:39] Speaker 2: Arabia deepening its ties with Egypt, Turkey, Pakistan and some
[6:44] Speaker 2: of its other golf neighbors, and the UA really doubling
[6:47] Speaker 2: down on its relationship with Israel.
[6:50] Speaker 1: I'm reluctant, of course, to talk about golf nations as
[6:53] Speaker 1: a monolith here, but my sense is there was widespread
[6:58] Speaker 1: opposition to the most recent war that we've seen started,
[7:01] Speaker 1: that being the US and Israel's attack on Iran. Could
[7:04] Speaker 1: you talk a bit about what the direct consequences have
[7:06] Speaker 1: been for those nations as a result of that war
[7:08] Speaker 1: starting and continuing.
[7:10] Speaker 2: Yeah, I mean for golf nations. It's really taken them
[7:13] Speaker 2: to the front and center of Middle Eastern conflict. For
[7:16] Speaker 2: so long it looked like they were insulated from the
[7:20] Speaker 2: kind of instability that we've seen in the Middle East.
[7:23] Speaker 2: Long term, the UAE has been hit by around three
[7:26] Speaker 2: thousand drones and ballistic missiles from Iran. It's seen at
[7:31] Speaker 2: least thirteen people killed, infrastructure badly damaged. Cutter has had
[7:38] Speaker 2: I think something like seventeen percent of its allen G
[7:41] Speaker 2: capacity taken offline. Saudi Arabia, as you know, as a
[7:47] Speaker 2: bigger economy, has been a little bit more insulated, but
[7:50] Speaker 2: has also been royaled by the conflict as that rang
[7:55] Speaker 2: Kuwait Verman. So it's really been very widespread and difficult
[8:00] Speaker 2: for gold states which have long relied on this perception
[8:04] Speaker 2: that they were something of an exception in the region
[8:08] Speaker 2: as a way to attract investment, expact populations, and all
[8:11] Speaker 2: that kind of stuff.
[8:14] Speaker 1: Coming up assessing the economic changes and challenges in the
[8:17] Speaker 1: Middle East. You've charted the geopolitical fallout from these wars,
[8:31] Speaker 1: What about the economic fallout? What have these wars meant
[8:35] Speaker 1: to what was or has been a real bright spot
[8:38] Speaker 1: in the global economy.
[8:39] Speaker 2: Yeah, I mean, so I guess the most immediate impact
[8:43] Speaker 2: was on energy inflation. Brent crew rose I think sixty
[8:48] Speaker 2: plus percent in March to about one hundred and eighteen
[8:50] Speaker 2: dollars a barrel. US gasoline prices surged above four dollars
[8:56] Speaker 2: a gallon, Costs for shipping increased, costs for insurance shipping
[9:00] Speaker 2: increased significantly, And of course all of these disruptions have
[9:05] Speaker 2: had a global impact. They've hit prices for fuel and
[9:09] Speaker 2: Africa where we've seen protests, They've hit prices for consumers
[9:14] Speaker 2: in Europe and the United States, and of course they
[9:17] Speaker 2: threaten to have an impact on the midterms in the
[9:20] Speaker 2: US as well, with the potential that this conflict will
[9:23] Speaker 2: come back to bite Donald Trump.
[9:25] Speaker 1: You've taken me where I want to go next, and
[9:26] Speaker 1: that is sort of how this is playing out, not
[9:28] Speaker 1: just in the Middle East, but around the world. It's
[9:30] Speaker 1: had dramatic effect on the relationships between Middle Eastern nations
[9:34] Speaker 1: and many other countries. It strikes me, in light of
[9:37] Speaker 1: what you've just laid out there, there has to be
[9:39] Speaker 1: a great deal of introspection in golf capitals about sort
[9:43] Speaker 1: of the relationships they have with other countries around the world.
[9:45] Speaker 1: How they get energy out to other parts of the world.
[9:48] Speaker 1: How are they thinking about the future when it comes
[9:51] Speaker 1: to their relationship with the wider world.
[9:53] Speaker 2: You know, golf countries are thinking about how they ensure
[9:55] Speaker 2: that this never happens to them again. Saudi Arabia is
[9:58] Speaker 2: talking about expand its East West pipeline to the Red
[10:02] Speaker 2: Sea to try and sitestep its dependence on the Strait
[10:05] Speaker 2: of Hormus. The UAE has said that it wants to
[10:08] Speaker 2: completely eliminate its dependence on the Strait, so, you know,
[10:11] Speaker 2: long term, they're looking to ensure that they can build
[10:14] Speaker 2: up that insulation that they once had. That's not possible
[10:17] Speaker 2: for everyone. You know, Cutter is still going to remain
[10:20] Speaker 2: dependent on shipping to remove natural gas from the country,
[10:24] Speaker 2: but as far as they can, they're trying to build
[10:27] Speaker 2: up resilience. Exactly what the settlement around the Strait of
[10:31] Speaker 2: Hormus looks like at the end of this is still
[10:33] Speaker 2: very much an open question. The Amanis have been talking
[10:36] Speaker 2: to the Iranians directly about some kind of charge or
[10:40] Speaker 2: toll on the strait, which is extraordinary when you think
[10:45] Speaker 2: back to before this most recent Iran conflict began, where
[10:48] Speaker 2: the status quo was free and open commerce through the strait.
[10:53] Speaker 2: That looks like it's now gone forever and something else
[10:57] Speaker 2: will emerge in its place. Just underlining really how profound
[11:00] Speaker 2: some of these shifts have been since October seventh.
[11:03] Speaker 1: I want to ask you too, just about Israel citolation.
[11:05] Speaker 1: We have data about global attitudes towards Israel, how people
[11:09] Speaker 1: are feeling about the Israeli government at this moment in time.
[11:12] Speaker 1: We've seen more governments criticize the Israeli government. What does
[11:16] Speaker 1: its path forward look like visa via the kind of
[11:18] Speaker 1: broader global community.
[11:22] Speaker 2: It's really hard to say, like that Netnyahu wants to
[11:26] Speaker 2: continue strikes against Iran. He's doubled down on the kind
[11:31] Speaker 2: of foreign policy approach that has heightened Israel's global sense
[11:36] Speaker 2: of isolation, including inside the US. And as long as
[11:41] Speaker 2: that is the trajectory of Israeli foreign policy, which emphasizes
[11:46] Speaker 2: absolute security, the necessity of reaching far beyond Israel's borders
[11:52] Speaker 2: to uphold its sense of security at home, as long
[11:55] Speaker 2: as that is the direction that Israeli politicians is really
[11:57] Speaker 2: strately just want to take. I think it's it's super
[12:00] Speaker 2: hard to see how it's going to recalibrate relationships with
[12:02] Speaker 2: Europe countries across the Global South, and much of the
[12:05] Speaker 2: Arab world.
[12:06] Speaker 1: So Peter, this this conflict continues, a ceasefire really hasn't held,
[12:11] Speaker 1: and because Iran controls the strait of hormones, as you right,
[12:15] Speaker 1: it does seem to have the upper hand here over
[12:17] Speaker 1: the US when it comes to these negotiations, so much
[12:20] Speaker 1: as they are are continuing.
[12:21] Speaker 2: It's fascinating because it's something that we've seen in protracted
[12:25] Speaker 2: conflicts with the US again and again. You think back
[12:28] Speaker 2: to Vietnam, a much much weaker adversary managing to gain
[12:32] Speaker 2: leverage by understanding what US pain points are. In the
[12:36] Speaker 2: case of Vietnam, it was the death of US troops
[12:39] Speaker 2: which turned out to be the Achilles Hill of the
[12:41] Speaker 2: United States. And in the case of Iran in this
[12:44] Speaker 2: most recent conflict, it's the dependence of the global economy
[12:48] Speaker 2: on energy and the leverage that Iran has over the
[12:52] Speaker 2: straight of hormones. And Iran famously has a very high
[12:57] Speaker 2: pain threshold. It's dealt with sanctions and its political system,
[13:02] Speaker 2: even in this most recent conflict, with massive American and
[13:05] Speaker 2: Israeli strikes on the country, has proved capable of maintaining
[13:10] Speaker 2: its position in charge and pushing forward, and it's difficult
[13:15] Speaker 2: to see the US matching.
[13:17] Speaker 1: Now, Peter, let me ask you lastly, how permanently transformative
[13:22] Speaker 1: have these last few years been.
[13:23] Speaker 2: There's nothing more dangerous to ask someone to do than
[13:26] Speaker 2: make long term predictions about the Middle East that you ask,
[13:29] Speaker 2: so I will try. You know, I do think that
[13:31] Speaker 2: there are some sort of themes that are likely to
[13:34] Speaker 2: emerge as at least somewhat semi permanent. So Iran's proxy
[13:38] Speaker 2: network is much weaker in the short term, and I
[13:41] Speaker 2: think it will be difficult for Iran to rebuild that
[13:44] Speaker 2: network in the short term, even as it maintains leverage
[13:48] Speaker 2: over the Strait of Hormus. Israel's isolation, as we discussed,
[13:53] Speaker 2: is going to take a long time to reverse and
[13:56] Speaker 2: would require changes in Israeli foreign policy. I think that
[14:00] Speaker 2: don't look like they are on the horizon for now.
[14:05] Speaker 2: Saudi Israeli normalization has suffered a huge set up, in
[14:10] Speaker 2: large part because of public opinion in the Kingdom that
[14:13] Speaker 2: one I think could change I think in the short term,
[14:16] Speaker 2: and you know, probably the same with the rift in
[14:20] Speaker 2: the Gulf that's emerged between Saudi Arabia and the UA.
[14:24] Speaker 1: Peter, thank you very much.
[14:25] Speaker 2: Thank you.
[14:33] Speaker 1: This is the Big Take from Bloomberg News. I'm David Gura.
[14:36] Speaker 1: To get more from The Big Take and unlimited access
[14:38] Speaker 1: to all of Bloomberg dot com, subscribe today at Bloomberg
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[14:49] Speaker 1: Thanks for listening. We'll be back tomorrow

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