• Fourteen implications of the 2026 USA Iran War simply told. These include what it means for Russia, Saudi, UAE, China, Taiwan, Ukraine and India esp. UAE decision to quit OPEC.

Ever since the USA Israel – Iran War broke out we shared two articles How Peace in the Middle East Benefits Pakistan and Why India should not be INSECURE about Pakistan role in US Iran Peace Talks The latest is UAE decision to exit OPEC (Organization of the Petroleum Exporting Countries).

The implications of this war shall play out over time hence article is part 1. The implications as on date of writing are – 

1. Faith of Gulf Co-operation countries (GCC) in U.S. Security Umbrella has taken a hit what with oil/gas infrastructure damage.

While keeping the U.S. security umbrella GCC will strengthen local military establishment. Opportunity for retired Indian Armed Forces personnel.

Government of India must pro-actively come out with guidelines for hiring of retired Faujis. One, appointment needs Defence Ministry approval. Two such hires will cease to receive pension during the period of service with GCC. 

2. GCC countries are learning the hard way that the U.S. is good at producing hi-tech but expensive missile weapons but in the era of low cost drones need cost-effective interceptors hence the reach out to Ukraine.

Opportunity for Ukraine and low cost manufacturers like India.

3. The cost of rebuilding oil infra could be huge across countries. UAE decision to quit allows it to produce and sell more. It needs more revenue to rebuild.

That is a huge opportunity for countries like India and China.

4. This war is a system shock hitting energy, shipping, and supply chains and not only about military power alone. This war is about winning through Saam, Daan, Dand, Bhed as stated in Kautilya’s Arthashastra.

The real power test is who can sustain conflict through low-cost, scalable supply chains.

5. The U.S. shall be naïve to remove the naval blockade against Iran until the latter agrees to give up the making of a nuclear bomb.

Iran may seek Pakistani expertise on how to make the U.S. believe that it has given up its nuclear program when it has not!

Middle East Map for reference purposes only. It does not imply these are actual boundaries.  

6. Blockade means

A. Lower crude supplies by Iran to China. With Venezuela already cut-off, the Chinese economy might feel the pressure even though the Russians might be happy to make up for the shortfall.

B. China cannot export materials that aid Iran’s missile manufacturing or nuclear efforts. 

C. Sooner than later, Iran will be squeezed for funds.

The U.S. has to fund its naval operations and provide short-term liquidity to GCC who might run out of dollars because their exports are affected too.

7. Russia has benefitted from higher crude prices and enhanced supplies to China.

The world has put the Russia Ukraine War on the backburner and remains focused on the U.S.-Iran war.

Ukraine President Zelensky visited Saudi Arabia for the second time in months and signed agreements on security etc. Ukraine’s expertise in downing Russian drones (said to be courtesy Iran) is very much in demand amongst GCC. 

How will Ukraine’s involvement pan out in the Middle East? Surely, it has Washington’s blessings!

8. The U.S.A. has given the Chinese ideas on how to take over Taiwan esp. through naval blockade.

I am sure the U.S., Taiwan and Japan are working on a counter plan. 

9. Pakistan shall continue to play a double-game with China and the U.S.A. trying to please both. When and how it stumbles, only time will tell. It also has the added responsibility of protecting lender Saudi Arabia that bring different pulls and pressures. Antara Ghosal wrote a good article on the Future of China-Pak Friendship

India has to be aware of but not intimidated by Pakistani moves.

Pakistan will go to any extent to be relevant and make its presence felt in the world – insecurity and bankruptcy make even the best desperate. 

If only China gave up its policy of using Pakistan to control India, it would save billions of dollars. India does not seek Chinese territory. There is huge potential for co-operation if China changes its policy towards Pakistan.

Will Pakistan use China like the U.S. or shall China call the Pakistani bluff?

10. The war has exposed limitations of Israel’s protection system against Iran’s missiles but enhanced Israel’s ability to eliminate Iran’s top leadership. 

Hope this realization has humbled both countries.

11. Likely impact of UAE quitting OPEC

A. UAE produces about 3 to 3.5 million barrels per day but has capacity of closer to 4 to 4.5 million.

More supply means lower crude prices. It gives UAE the flexibility to adjust production based on supply-demand matrix.

B. UAE may choose to sell oil in a mixture of currencies namely US Dollar, Yuan, Euros and Barter deals with India in Rupees. The U.S. is yet to formally respond to the UAE appeal for a $ swap line.

UAE is preparing itself for a multi-polar world.

In 2023, India and the UAE signed a Memorandum of Understanding establish a Local Currency Settlement System (LCSS) that enables cross-border transactions using the Indian Rupee (INR) and UAE Dirham (AED). Its implementation might be on fast-track esp. when UAE increases oil production.

C. Tensions between the UAE and Saudi Arabia have been rising for a while now due to competing regional interests and proxy conflicts in Yemen and Sudan.

Instead of getting into a conflict with the Saudis and get caught in Great Power Rivalry, the UAE is looking at a post-oil scenario and seeking to make it an attractive destination for Investors and Foreign Residents alike for which peace is a pre-requisite.

D. One of the key attractions of UAE cities like Dubai and Abu Dhabi and Muscat in Oman was that they were regions of peace. That myth has been broken with current war.

UAE and Oman could have a working relationship with Iran i.e. independent of Iran’s ties with the U.S. and Israel.

This shall help them counter Saudi Arabia’s efforts to create another Dubai.

Opportunity for India to create a Financial Centre like Dubai.

E. Pakistan has chosen to have closer ties with Saudi Arabia meaning over time fewer Pakistanis will get jobs in the UAE. ISLAM shall be the Fevicol that makes the two countries stick to each other.  

This is an opportunity for Indian workers to fill the gap.

Am sure UAE knows that the Saudis need Pak Army to ensure a smooth transition of power to MBZ once his father leaves Mother Earth. They are unhappy with Pakistan hence demanded repayment of $ 3.5 billion loan which was repaid with Saudi help.

12. Are we going to see Sunni countries in the Middle East a divided lot now?

Note that Oman is primarily IBADI i.e. different from Sunni and Shia traditions. A search reveals that predominantly Sunni countries are Saudi Arabia, Egypt, Jordan, Turkey, Qatar, Yemen (notable Shia minority), Syria, Palestine and Kuwait.

13. Oil and Gas export infra could be shared by GCC such that they avoid the Strait of Hormuz and Bab el-Mandeb Strait ("Gate of Tears"), “a narrow 30km-wide shipping lane between Yemen, Djibouti, and Eritrea. It connects the Red Sea to the Gulf of Aden and the Indian Ocean, serving as the essential gateway to the Suez Canal.”

That is a huge opportunity for countries like India and China.

14. India needs to further reduce its dependence on Oil Imports from the Middle East esp. Gas by diversifying, increasing domestic production and enhancing storage capacity for renewal energy.  

India needs huge investments to enhance production of fertilizers, storage capacity of oil etc.

Government of India must refocus its priorities, reduce subsidies used to win elections and channelize investments that create long-term benefits.

How Strait of Hormuz’s blockage impacts Europe gas supplies is yet to be seen? Remember winters are over.

I am not even getting into impact of war on the finances of the U.S. government and shortcomings in its high cost defence products. That is something to track!

The world remembers that the U.S. invaded Iraq in the search for weapons of mass destruction but did they even exist!

Also read

1. How India can become VISHWAMITRA - Friend of the World

2. What India has DONE for Afghanistan

3. Why TURKEY CYPRUS Rivalry

4. Saudi Pakistan Defence Agreement is a U.S. tool to retain global dominance

5. America’s double standard on nuclear Islamism

6. Explained - Why the U.S. IMPORTS Petroleum Products from India