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The outbreak of direct conflict between Israel and Iran marks a major turning point for the Middle East region: Dimitri Loringett from Corriere del Ticino spoke with analist Emily Harding from the Center for Strategic and International Studies (CSIS).

The outbreak of direct conflict between Israel and Iran marks a major turning point for the Middle East region. The risk of escalation is high, and there are fears of attacks on Iranian oil facilities, which account for about one-tenth of global crude production and transit through the Strait of Hormuz.

To find a way out of this explosive situation, attention turns to the United States—but also to China and Russia. Beyond the Middle East, there is also the war in Ukraine, from which the U.S. appears to be gradually disengaging. Ahead of the Global Commodities Conference, organized by the Lugano Commodity Trading Association (LCTA) and which will take place on June 23–24 at the LAC, we spoke with U.S. national security expert Emily Harding from the Center for Strategic and International Studies (CSIS).

While the effects of the war in Gaza—such as the Houthi rebel attacks in the Gulf of Aden (Bab al-Mandeb Strait)—have been somewhat “manageable” for commodity traders, the Israel-Iran situation appears far more dangerous. Do you foresee an escalation or widening of the conflict between Israel and Iran?

«Wider war is possible if Iran chooses to strike US military bases in the Gulf. That would likely bring in the US and could push Gulf countries to strike back. That would be a disastrous choice for Iran. The US could also choose to join the strikes, using heavy bombers to destroy the best-hidden elements of Iran’s nuclear program.»

Can Tel Aviv “afford” another conflict—one that, compared to those with neighboring countries or areas, is potentially much more “demanding”?

«Israel sees Iran as an existential threat. From their view, Iran is the true source of every major threat Israel faces, from Hizballah to the Houthis to Hamas. If not for Iran’s support, none of those actors would be powerful enough to threaten Israel. If Iran were to succeed in creating a nuclear weapon, one missile attack could mean the end of Israel. They viewed this as a necessary war, and the timing was not going to get much better for them to act.»

Regarding oil, market prices immediately reacted to Israel’s attack on Iran, although the current price level around $75 per barrel is significantly lower compared to the $90-95 reached after Hamas attacks on Israel in October 2023. Given the possibility of a further escalation of the Israeli-Iranian conflict, what are the prospects for energy markets, particularly for crude oil?

« I am not directly involved in analyzing energy-related issues, so I won’t speculate on oil prices. The factors driving prices up are going to be enduring, though, from the sanctions on Russia’s shadow fleet to the conflict with Iran.»

As observed during Donald Trump’s recent visit to the Gulf region, the United States seems primarily focused on business with these countries. Advanced technologies, green tech, and the like are rapidly expanding in the Gulf region. Given the underlying instability, how risky is it to invest in these sectors in the area?

Come osservato durante la recente visita di Donald Trump nella regione del Golfo, gli Stati Uniti sembrano concentrarsi principalmente sugli affari con questi Paesi. Le tecnologie avanzate, IA, «green tech» ecc. sono in piena espansione nella regione del Golfo: data l’instabilità di fondo, quanto è rischioso investire in questi settori nella regione?
«Saudi Crown Prince Mohammed bin Salman is quite young, and he has put a heavy emphasis on high tech and green tech for the Kingdom, suggesting it will be a continuing priority.»

In Europe, we tend to focus mainly on the foreign policy of its main economic partner, the United States. What will remain of the Trump administration’s policies after his term? What is the overall vision? For example, will the United States continue to disengage militarily abroad? And what consequences might this have, for instance, on NATO?
«Trump represents a historic shift in US foreign policy, but he is also a symptom of a larger trend inside the US. Many Americans feel, and have felt for a decade or more, that the U.S. was carrying too much of the burden of global security. In other words, Europe was able to provide extensive public services (like healthcare) because the US was carrying the weight of security. While I don’t agree with that view, it is pervasive in the US, and Trump has reset expectations about responsibility sharing.  His approach to NATO reflects this view. It has been encouraging to see so many European nations step up their own defense spending, which will make NATO stronger and more resilient than it has ever been.»

In general, it seems that the United States has definitively abandoned its historic “soft power” approach. To what extent is this intentional? What is the logic behind this shift, which, in the eyes of the rest of the Western world, is a source of concern?
« Trump seems to view himself as a peacemaker. He has hesitated to use US military power, and he has made sweeping statements about his ability to bring peace to various global conflicts, including Ukraine. This administration’s approach seems to be very much geared toward pushing both sides to the negotiating table, but they have shifted somewhat to criticize Moscow for civilian casualties and an unwillingness to negotiate in good faith.»

Looking at the trade tensions with China, is there a risk of escalation that could lead to a conflict (considering the military buildup in Southeast Asia) between the two superpowers? Or will Washington and Beijing manage to reach some form of agreement, given their decades-long economic and trade ties?
«Neither the US nor China want a military conflict. The US should work toward a robust policy of deterrence, so that every day the CCP leadership wakes up and thinks “not today,” because a conflict would be too costly. Meanwhile countries must take steps to minimize their economic dependence on China. Beijing has largely chosen economic coercion as its preferred approach.»

Article originally published in Corriere del Ticino, 17.06.2025 (in Italian)

Republished in full by LCTA with the kind permission of the author and journalist Dimitri Loringett (Corriere del Ticino).