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

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.

The article analyzes the escalating conflict between Iran, the US, and Gulf nations in March 2026, highlighting its impact on regional stability and economies. Increased Iranian missile and drone attacks are disrupting trade, forcing airlines to reroute, and causing foreign investors to question the safety of investments in Gulf cities like Dubai and Doha. The conflict intensified after the 2020 US assassination of Iranian commander Qassem Soleimani, leading Iran to become more cautious but also raising questions about the effectiveness of US military bases in deterring Iran. The war challenges the Gulf states' economic model, which relies on regional stability to attract global investment. The potential for further escalation between Iran and the US remains a concern.

In March 2026, a woman was killed in Bahrain during an Iranian attack, part of escalating tensions in the Gulf region. Several Gulf states, including Saudi Arabia, Kuwait, and the UAE, intercepted Iranian missiles and drones. Bahrain reported intercepting a large number of projectiles, while Saudi Arabia and Kuwait also downed drones. The attacks, which included strikes on energy infrastructure, occurred amid a US-Israeli war on Iran. US President Trump threatened increased attacks on Iran if it attempts to close the Strait of Hormuz, a vital oil transit route. These events have led to rising oil prices and regional instability.

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.

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 Middle East conflict intensified as Israel and the US launched strikes against Iran, targeting command facilities, state offices, and missile sites. Iran retaliated with missile and drone attacks on Israel and US interests across the Gulf region. The escalating violence has resulted in hundreds of deaths and billions of dollars in damage, primarily in Iran, raising concerns about a global economic crisis due to soaring energy prices. US President Trump stated he rejected Iran's attempt to negotiate and claimed significant damage to Iranian infrastructure. Iran denied seeking negotiations and called on the UN Security Council to intervene, while threatening further retaliation against the US and Israel. The conflict expanded with attacks on key Iranian sites, including a building used by the committee that chooses the Supreme Leader's successor.

The US and Israel launched attacks on Iran, resulting in the death of Supreme Leader Ayatollah Ali Khamenei, escalating tensions in the Middle East. Iran has vowed retaliation, drawing regional powers into the conflict. Iranian President Masoud Pezeshkian, judiciary chief Gholamhossein Mohseni Ejei, and senior cleric Alireza Arafi will lead Iran in the transitional period. Donald Trump expressed willingness to negotiate with the remaining Iranian leadership. Elsewhere, the UK's RAF Akrotiri base in Cyprus was hit by a suspected drone strike, causing minor damage. In the UK, new asylum rules designate refugee status as temporary, lasting 30 months, and the Green Party's membership surpassed 200,000 after a byelection victory. Concerns are also rising about the potential impact of data centers on the UK's greenhouse gas emissions.

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.

A coordinated US-Israeli strike targeted Iran on Saturday, reportedly killing several top Iranian leaders, including the commander of the Islamic Revolutionary Guard Corps (IRGC). The operation involved a precision strike on a key target in Tehran, believed to be Ayatollah Ali Khamenei’s compound, alongside a broader offensive using US-deployed kamikaze drones. US Central Command confirmed the use of these one-way attack drones, modeled after Iranian Shahed drones, for the first time in combat during "Operation Epic Fury." The attack, described as a "wildly bold daytime attack," targeted Iranian military, government, and intelligence sites, catching senior leadership off guard. Former President Trump announced that Supreme Leader Ali Khamenei had been killed in the strike.

Following the death of Ayatollah Ali Khamenei, Iran faces a precarious situation with internal divisions and mounting external pressures. While some celebrated, hoping for an end to clerical rule, others mourned and demanded retribution. Despite maintaining military power, the regime faces a growing list of dead leaders, including high-ranking military officials, straining its leadership and resources. Simultaneously, Iran's regional relationships are deteriorating, with its Gulf partners criticizing its actions and accusing it of playing into the hands of the US. The Strategic Council on Foreign Relations pleaded with Gulf states to unite against the US, but the UAE countered that Iran's aggression is self-isolating. The article suggests that without a change in direction, the Iranian regime risks a breakdown in civil order.

Following the death of Supreme Leader Ayatollah Ali Khamenei in a US-Israeli attack on March 1, 2026, Iran has formed a three-member transitional council to govern the country. The council consists of Ayatollah Alireza Arafi, President Masoud Pezeshkian, and Chief Justice Gholam-Hossein Mohseni-Ejei. Arafi's appointment was confirmed by the Expediency Council. According to the Iranian Constitution, this council will oversee state duties until the Assembly of Experts, an 88-member panel, selects a new supreme leader. The Islamic Revolutionary Guard Corps (IRGC) and security chief Ali Larijani are also expected to play significant roles during the transition. The commander-in-chief of the IRGC was also killed in the same attack.

Following the death of Iranian Supreme Leader Ayatollah Ali Khamenei in a US-Israeli air strike, China condemned the action amidst turmoil in Tehran and regional escalation. Despite the political uncertainty, analysts predict China's economic relationship with Iran, as its top oil buyer and trade partner, will remain strong. China is expected to maintain a pragmatic approach to Iran's new leadership, even if Tehran shifts towards the West, potentially impacting Chinese diplomatic and defense goals in the Middle East. A temporary leadership council consisting of Alireza Arafi, Masoud Pezeshkian, and Gholamhossein Mohseni Ejei will govern until the Assembly of Experts selects Khamenei's successor. The US President has called for regime change in Iran.

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.

Following joint US-Israeli strikes against Iranian leaders, Iran launched retaliatory missile strikes targeting US interests and neighboring countries in the Gulf region. Targets included US bases in Iraq, Saudi Arabia, and Jordan, as well as the US Navy's Fifth Fleet. Gulf states, including Qatar, Saudi Arabia, Jordan, and the United Arab Emirates, condemned the Iranian attacks on their territories. Qatar affirmed its right to defend itself, while Saudi Arabia expressed solidarity with affected nations. The UAE reported intercepting missiles, but also confirmed a civilian death from falling debris. Oman was notably excluded from the Iranian strikes, reportedly due to its foreign minister's mediation efforts.

Following Israeli and US airstrikes on Iran, the Australian Department of Foreign Affairs (Dfat) has warned Australians of potential "reprisal attacks and further escalation" across the Middle East. Dfat updated its Smartraveller website, advising against travel to Iran and urging those in the country to leave if safe, citing the risk of military conflict and potential airspace closures impacting global flights. Australians remaining in Iran are advised to prepare to shelter in place with adequate supplies. The Australian embassy's operations in Iran are suspended. Prior to the attacks, Australia had already advised citizens in Israel and Lebanon to consider leaving and withdrew dependents of officials from Israel and Lebanon due to the deteriorating security situation.

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.

Iranian state TV released a video on Tuesday showcasing the Revolutionary Guard conducting a military drill along the coast. The exercise involved launching missiles, flying drones, and firing guns at targets. While the exact time and location of the drill were not specified, the video highlights Iran's military capabilities. Despite being outgunned by the US in a potential war, Iran possesses the capacity to inflict considerable damage. The article also includes file photos of Iranian military displays, joint drills with Russian forces, and the aftermath of missile strikes in Tel Aviv, Israel.