Tuesday briefing: How the conflict in Iran shattered the Gulf state image of peace and luxury

Following a weekend of escalating conflict in the Middle East, Mojtaba Khamenei has assumed leadership in Iran, succeeding his late father. This transition occurs as oil prices surpass $100 a barrel and regional casualties mount. Over the weekend, both sides struck new targets, including civilian infrastructure, with Bahrain accusing Iran of attacking a desalination plant and Israel targeting oil depots in Tehran. The US reported another soldier's death, and Saudi Arabia announced its first fatalities. The conflict, now in its tenth day, has displaced over half a million people in Lebanon and resulted in hundreds of deaths there, with Israel warning of a prolonged war.

Iran significantly escalated attacks on civilian infrastructure and transport networks across the Gulf on Wednesday, targeting commercial ships and Dubai's international airport. These actions occurred as US and Israeli warplanes launched new strikes. The UAE, particularly Dubai, has borne the brunt of these attacks, facing an existential threat as foreigners flee. The escalation has caused oil prices to rise above $100 a barrel, with Iran threatening a long "war of attrition." Meanwhile, a review revealed the US defense secretary has voiced extreme antipathy towards Iran for years. A bill addressing the situation has passed the House, but lacks the necessary votes in the Senate due to filibuster rules.

A projectile struck a residential area in Al-Kharj, Saudi Arabia on Sunday, killing two foreign nationals (one Indian and one Bangladeshi) and injuring twelve others. Saudi authorities reported the incident, attributing it to an unspecified "military projectile," while Iran's IRGC claimed responsibility, stating they targeted radar systems in the Al-Kharj governorate, home to the Prince Sultan airbase. This attack is part of a series of Iranian counterattacks on Gulf nations hosting US military assets, following Israeli strikes on Iranian oil facilities. Other attacks on Sunday included intercepted drones in Riyadh, damage to fuel tanks at Kuwait's international airport, and damage to a water desalination plant in Bahrain. The escalating conflict raises concerns for the safety of the diverse international workforce across the Gulf.

Recent Iranian attacks in the Gulf have expanded beyond traditional oil and gas infrastructure to include data centers, signaling a shift in targeting strategic assets. On March 1st, drone attacks damaged three Amazon Web Services data centers in the United Arab Emirates and Bahrain. These attacks suggest a deliberate effort to undermine the Gulf's post-oil future, particularly its ambitions in artificial intelligence. The region's AI investments, supported by partnerships and cloud providers, rely on cheap and reliable power, which is now threatened. This new focus on data centers poses a risk to the Gulf's economic diversification efforts.

Following the death of Ayatollah Ali Khamenei amid escalating conflict, Iran has signaled that his son, Mojtaba Khamenei, is likely to be named the new supreme leader. Ayatollah Hosseinali Eshkevari stated a vote had been cast, and another cleric indicated the announcement would be made by Hosseini Bushehri. Wartime conditions have prevented a public gathering to confirm the selection. The news comes as Israel reportedly struck fuel depots in Tehran, and Bahrain claimed an Iranian attack damaged a desalination plant. US President Donald Trump asserted that Washington should have a say in the selection process, implying potential consequences if the chosen leader doesn't receive US approval.

On March 2, 2026, Iran's retaliatory strikes against US assets in the Gulf region entered their third day, escalating fears of a prolonged conflict. Explosions were reported in Dubai, Doha, and Kuwait, with Kuwaiti air defenses intercepting drones near residential areas. Iran stated the attacks were in response to ongoing US-Israeli strikes on Iran, targeting US military assets and impacting civilian areas across Gulf cities. Bahrain activated air raid alerts and closed a major bridge. Casualties have been reported in Kuwait, the UAE, and Qatar, while US-Israeli attacks have resulted in significant casualties in Iran and Israel. The US, Bahrain, Jordan, Kuwait, Qatar, Saudi Arabia, and the UAE jointly condemned Iran's attacks and affirmed their right to self-defense.

Multiple Gulf nations, including the UAE, Saudi Arabia, Qatar, and Kuwait, reported missile and drone attacks on Saturday. These attacks occurred despite an earlier apology from the Iranian president to Gulf countries, where he stated they would not be targeted unless strikes originated from their territory. Hours later, Iran declared its intent to continue strikes on sites within Gulf countries it considered to be at the disposal of its enemies. The UAE's president acknowledged the country was in "a period of war." Dubai authorities reported one death, a Pakistani national, resulting from debris from an aerial interception. Kuwait's national oil company announced a precautionary cut to production.

The Australian government is warning of "serious" travel disruptions in the Middle East due to the ongoing conflict involving Iran, the US, and Israel. Approximately 115,000 Australians are currently in the region, and the government has not yet committed to repatriation flights. Major airlines like Emirates, Etihad, and Qatar Airways have suspended operations, impacting travel through key hubs in Qatar, Dubai, and Abu Dhabi, some of which sustained damage. Foreign Affairs Minister Penny Wong stated that airspace closures will affect many Australians and that the government's ability to assist those stranded is limited. Travelers are advised to prepare for significant delays and cancellations.

In a recent video address, Donald Trump vowed to avenge the deaths of three American soldiers following joint US-Israel strikes on Iran, accusing Iran of "waging war against civilization." He stated that there would "likely more" US troop deaths before the conflict with Iran ends. Trump's critics are pressuring the White House for a clearer plan regarding Iran, warning that a lack of strategy risks a prolonged conflict. The situation is developing, and analysts express concern about the potential for the US to be drawn into a long-lasting engagement. Separately, due to ongoing events, airlines including Emirates, Etihad Airways, and Qatar Airways have cancelled hundreds of flights, with thousands of flights cancelled over the weekend.

Iranian missiles struck multiple locations across the Arab Gulf states, including Dubai and Abu Dhabi, marking a significant escalation of regional conflict. The attacks damaged infrastructure, including airports and hotels in Dubai, demonstrating Iran's capability to strike US allies in the region. These strikes, according to analysts, aim to deter Gulf states from supporting potential US or Israeli actions against Iran. The attacks highlight the vulnerability of Gulf nations and underscore Iran's willingness to "internationalize the battlefield," bringing the conflict directly to its neighbors. This development is likely to strengthen Arab rulers' support for potential US-Israeli strikes.

Oil prices surged after the reported death of Iranian leader Ayatollah Ali Khamenei in US-Israeli air strikes, escalating conflict between the US, Israel, and Iran. The Strait of Hormuz, a critical oil transit route, experienced near standstill, impacting tanker traffic. This disruption raised concerns about supply shortages and increased import costs, particularly for Asian economies like China, India, Japan, and South Korea, which heavily rely on oil imports. Benchmark Brent crude jumped significantly, reflecting market fears of sustained supply disruption. Iran retaliated with attacks on US military bases in Bahrain, Kuwait, and Qatar, further escalating geopolitical tensions in the region.

Airspace closures across the Middle East, triggered by attacks between America/Israel and Iran, caused widespread flight disruptions, stranding or diverting hundreds of thousands of travelers. Several countries, including Israel, Qatar, Syria, Iran, Iraq, Kuwait, and Bahrain, closed their airspace, leading to the suspension of operations at key international airports in Dubai, Abu Dhabi, and Doha. Major airlines like Emirates, Qatar Airways, and Etihad cancelled thousands of flights, impacting an estimated 90,000 passengers daily passing through these hubs. Over 3,400 flights were cancelled across seven major Middle Eastern airports on Sunday. Some airports and landmarks in the region sustained damage, resulting in injuries and at least one reported death. The closure of Iranian airspace was extended until Tuesday morning.

On March 1, 2026, air traffic in the Middle East experienced significant disruption. According to Flightradar24, over 3,400 flights were canceled within the preceding 48 hours. The cancellations affected seven airports across the region. Airports impacted included those located in Qatar, the United Arab Emirates, and Bahrain. The reason for the widespread flight cancellations was not specified in the report.

A war launched by the US and Israel on Iran has rapidly escalated, spreading across the Middle East. On Saturday, Iran struck the Fairmont hotel in Dubai's Palm Jumeirah area, causing a fire and injuring four people. The attack on the Dubai hotel is part of a wider conflict that has sparked anxiety and concern throughout the region, with reports of explosions in Bahrain, Jordan, and Kuwait. The initial US-Israeli attack on Iran appears to be the catalyst for the escalating regional conflict. The reasons for the initial attack were not specified in this report.

On February 28, 2026, Iran confirmed retaliatory attacks on US assets located in Gulf Arab states, including Bahrain, Kuwait, Qatar, and the United Arab Emirates, following a joint US-Israeli attack on Iran. The Islamic Revolutionary Guard Corps (IRGC) claimed responsibility, stating that all US and Israeli military targets in the Middle East were struck. Bahrain reported an attack targeting the US Navy's 5th Fleet headquarters, while Kuwait experienced explosions near the US military's Central Command headquarters. Qatar's Defense Ministry stated it intercepted missiles before they reached Qatari territory. The UAE reported at least one death in Abu Dhabi after intercepting missiles launched from Iran.

Iran launched missiles and drones targeting Israel and US military installations in Bahrain, Kuwait, and Qatar in response to recent attacks by the US and Israel. The Iranian Foreign Ministry stated the action was in defense of the homeland. The UAE and Iraq closed their airspace, and shrapnel from an Iranian missile killed one person in the UAE. Israel issued a nationwide warning and activated its missile defense systems to intercept incoming projectiles. There were initially few reports of damage or injuries in Israel.

Following reported strikes in Iran by the US and Israel, Australia's National Security Committee is convening. Foreign Minister Penny Wong stated Australia was not informed in advance of the strikes and has updated travel advice for Israel, Lebanon, Bahrain, Kuwait, Qatar, and the United Arab Emirates. A crisis center has been activated to provide consular support to Australians in the region, and a registration portal has opened for Australians in Iran and Israel. Wong emphasized Iran's destabilizing role in the region and stated that Australia did not participate in the strikes. The Australian government advises Australians in the affected region to follow travel advice and seek safety, acknowledging potential difficulties with repatriation due to airspace closures.

A fire at a hotel in Dubai's Palm Jumeirah area injured four people following a reported loud explosion on Saturday. The incident occurred amidst Iranian retaliatory strikes in the Middle East, though authorities have not explicitly confirmed a connection. The Dubai Media Office stated the fire was contained and the site secured, emphasizing public safety. Authorities are urging calm and advising the public to rely on official information sources. Emergency response teams responded to the incident, the cause of which remains unconfirmed by Dubai officials.