US, Israel and Iran in open military confrontation with regional spillover risks

Shift from strategic ambiguity to explicit military confrontation. US-Israel alliance demonstrates coordinated power projection; Iran activates proxy network (Hezbollah, Iraqi militias) to distribute conflict burden and create multi-front pressure. Regional states (UAE, Saudi Arabia) face pressure to choose alignment. Traditional deterrence frameworks breaking down.

Similar to 1973 Yom Kippur War escalation patterns and 2003 Iraq invasion regional spillover, where initial bilateral confrontation rapidly expanded through proxy activation and regional actor involvement, destabilizing multiple countries simultaneously.

Consumers face potential energy price increases due to supply disruptions in the Persian Gulf region. Higher oil prices translate to increased fuel and transportation costs, elevated inflation pressures, and potential economic slowdown affecting employment and purchasing power.

Governments likely to increase military spending, implement strategic petroleum reserve releases to stabilize oil prices, strengthen regional security alliances, and potentially impose additional sanctions. Central banks may adjust monetary policy in response to inflation pressures from energy shocks.