The New Middle East Emerging From the War in Iran

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**David Gura** (0:09)
The Middle East has changed dramatically since Hamas attacked Israel on October 7th, 2023 And the war with Iran has brought about even more dramatic shifts across the region.

**Peter Martin** (0:19)
There was so much at play.

**David Gura** (0:22)
Bloomberg's Peter Martin, one of our Middle East correspondents, looked at how one day highlights those changes, March 31st, 2026

**Peter Martin** (0:30)
There was a Kuwaiti tanker had been hit by an Iranian strike. It was sort of blazing in the Strait of Hormuz.
Trump on that same day was berating European allies for refusing to help open the Strait of Hormuz. Israel was expanding its presence on the battlefield in Lebanon and beyond. Dubai was under direct attack from Iranian missiles and drones.

**David Gura** (0:53)
And on that day, thousands of miles away from the United Arab Emirates, in the UK, then Prime Minister Keir Starmer welcomed Syria's new president, Ahmed al-Sharah, to 10 Downing Street. He's a former al-Qaeda commander.

**Peter Martin** (1:06)
And together, it felt like that day kind of encapsulated the global consequences of the war, you know, an impact on global shipping, higher energy prices, strained alliances, Israel's territorial expansion and subsequent diplomatic isolation.

**David Gura** (1:23)
Peter says that single day represents how much of the Middle East has been transformed. Alliances have shifted, battlefields have expanded, and countries have had to redraw trade routes. And that has left the public divided. I'm David Gura, and this is The Big Take from Bloomberg News. Today on the show, as a fragile ceasefire between the US and Iran falls apart, and as technical talks are enveloped in uncertainty, a look at what war has meant for the wider region and the world.
How much has the Middle East changed since Hamas attacked Israel on October 7th, 2023?

**Peter Martin** (2:07)
I mean, the region has been through a pretty profound transformation. Conflict has spread from Israel into Gaza, and then all across the region, Lebanon, Syria, Yemen, Iran, and now in this most recent round of fighting all across the Gulf States as well. During that period, Israel has emerged stronger militarily, but perhaps more isolated than ever politically.
Iran's proxy network has been battered and weakened, but it has retained significant leverage over the global economy. And the Gulf, which for so long seemed insulated from turbulence in the Middle East, has really lost a lot of that sense of insulation and feels much more at risk than ever before.

**David Gura** (2:50)
When we talk about a place changing, what's changed exactly?

**Peter Martin** (2:52)
One of the things that we've seen break down is any sense of Gulf unity. Saudi Arabia, before October 7th, was moving toward normalization with Israel, perhaps some kind of Abraham Accord style agreement. That really is, for the moment, off the table given public perceptions in Saudi Arabia, elite perceptions of what Israel has done in Gaza, with more than 70,000 Palestinians killed and strikes across the region, including an Israeli strike in Qatar, which was extremely controversial.
The UAE has taken a completely different part. It's aligned itself much more closely with the United States and with Israel, and we've really seen the region fold into two different opposing camps. That's a profound and I think probably lasting shift.

**David Gura** (3:46)
Our colleagues at Bloomberg Economics have analyzed how attitudes and alliances have shifted over 10 countries in the Middle East. From that analysis, two countries emerged with the most strained ties, and I don't think that's going to surprise anybody. We're talking about Iran and Israel. Let's start with Israel.
I wonder, Peter, how you would characterize Israel's position in the Middle East today?

**Peter Martin** (4:08)
Yeah. I think that Israel has emerged as militarily stronger. It has dealt severe blows to Iran's proxy network across the region, and in the 12-day war and the most recent war with Iran, has even been able to strike at Iran's own military capabilities on its home soil, and to do that in lockstep with the United States, which in many ways is the high point of Netanyahu's career, something he's been building toward for 30 years.
But at the same time, that's come at a huge diplomatic cost for Israel. The country is arguably more isolated than it's ever been. Its conduct in its war in Gaza has damaged its relationship with Europe, countries across the global south, and much of the Arab world. Regional partners also see Israel differently. So while the United Arab Emirates has doubled down on its close relationship with Israel, Saudi Arabia, the largest player in the region, has really taken pause and found it much more difficult to get closer to the country.