As anticipated, the situation in the Middle East has evolved significantly following Iran’s recent launch of ballistic missiles.
At this stage, it remains difficult to predict with certainty the exact course of events over the coming days and weeks. However, the scope of this latest attack is clear. According to the U.S. State Department, the volume of ballistic missiles fired by Iran in this incident is approximately double that of the Iranian attack on Israel in April 2024. The use of ballistic missiles also marks a notable escalation compared to the airstrikes Iran carried out earlier this year.
The critical question now is whether this situation will spiral into full-scale regional escalation, potentially leading to an open conflict between Iran and Israel. The outcome hinges largely on the response from Tel Aviv and its ally, the United States, as well as any counter-actions from Tehran and its network of allies. Given the scale of the recent missile attack, it’s likely that Israel will not limit its retaliation to military but may also target Iranian oil infrastructure, nuclear sites, and possibly even government buildings.
The stakes are high, both politically and economically, for the entire Middle East and the global economy. Oil prices have already surged by 3.5% on the night of the attack, reflecting the fragility of the situation. Despite these tensions, an all-out war between Iran and Israel remains improbable for now, largely due to the catastrophic consequences such a conflict would have for the region and beyond.
At Dryad Global, we continue to advise our clients to avoid transiting through the Red Sea until a permanent ceasefire agreement is secured between Israel, Hamas, and Hezbollah. In the meantime, expect risk premiums for Red Sea transits to rise, particularly in light of the ongoing escalation with Hezbollah and Iran.
Stay tuned for further updates as we closely monitor developments in the region.