A Bayesian Analysis of the Strategic Role of Arab Gulf States in the Iran-US Conflict
Executive Summary
The Persian Gulf stands at an unprecedented strategic inflection point. The Twelve-Day War of June 2025—culminating in the American Operation Midnight Hammer strikes on Iran's core nuclear sites at Fordow, Natanz, and Isfahan—radically altered the region's threat calculus without resolving its underlying tensions. Eight months on, Iran has not been defeated; it is rebuilding, dispersing, and hardening its nuclear infrastructure while navigating a domestic legitimacy crisis of historic proportions. The January 2026 engineered riot, unfolding amid deepening economic unrest and resulting in the deaths of scores of security personnel, rioters, and protesters, has generated a volatile internal dynamic. Reports that some participants received external financial support from foreign actors have further complicated the crisis. The upheaval has simultaneously weakened the regime under the strain of sanctions-induced pressures and, paradoxically, may harden its nuclear resolve as a central pillar of political survival.
Against this backdrop, the rivalry between Saudi Arabia and the United Arab Emirates has crossed from structural competition into open confrontation, most visibly in Yemen, where Saudi airstrikes targeting Emirati arms shipments in late December 2025 marked the first direct coercive signalling between nominal GCC partners. This fracture undermines the coherence of any unified Gulf response to Iran and complicates Western security architecture in the region.
Ongoing indirect US–Iran nuclear talks, resumed in Oman and Geneva in February 2026 with American envoys Steve Witkoff and Jared Kushner and Iranian Foreign Minister Abbas Araghchi, remain highly fragile. On February 17, 2026, Iran temporarily closed the Strait of Hormuz for live-fire naval exercises even as talks proceeded—a coercive signalling manoeuvre that illustrates the simultaneity of diplomacy and deterrence that will define Gulf geopolitics for the foreseeable future. This report applies Bayesian Game Theory to map the evolving belief structures, risk tolerances, and policy options of the key actors.
I. Introduction: The Persian Gulf as the Decisive Strategic Hinge
The Persian Gulf has re-emerged as the central geopolitical hinge of the international system. It remains the world's most critical hydrocarbon corridor, the primary artery of maritime trade through the Strait of Hormuz and Bab el-Mandeb, and the decisive arena in the strategic competition between the United States and China. The escalation cycle that culminated in the Twelve-Day War of June 2025—Israel's Operation Rising Lion, launched June 13, followed by the American Operation Midnight Hammer strikes on June 22—triggered calibrated retaliatory posturing from Iran that has continued through the opening months of 2026. Under such conditions, Gulf Arab states are no longer peripheral actors reacting to external shocks; they are autonomous strategic players whose probabilistic assessments of risk, alliance reliability, and regime survival shape the trajectory of regional order.
The strategic environment is best understood not as a deterministic rivalry but as a dynamic belief-updating process in which Saudi Arabia and the UAE weigh competing risks: escalation versus restraint, alignment versus hedging, economic integration versus geopolitical confrontation.
The importance of this environment extends far beyond regional security. Gulf sovereign wealth funds—including the Saudi Public Investment Fund, Abu Dhabi Investment Authority, and Mubadala—collectively control assets exceeding $3 trillion, linking Middle Eastern stability to Western capital markets, emerging technology sectors, and energy-transition financing. Normalization initiatives between Israel and Arab states, formalized under the Abraham Accords framework, have created overlapping security architectures that intersect with Iran's deterrence posture and its network of non-state partners. Any miscalculation among Gulf actors could reverberate through oil markets, global shipping insurance rates, financial risk premia, and great-power alignments.
Methodologically, this study applies Bayesian Game Theory to model decision-making under uncertainty. Unlike static balance-of-power frameworks, Bayesian analysis captures how states update beliefs based on new signals—military deployments, diplomatic overtures, proxy engagements, and external guarantees. Following the 2025 escalation cycle, Gulf capitals have reassessed prior probabilities regarding US security commitments, Iranian retaliation thresholds, Israeli preemption doctrines, and—crucially—each other's intentions.
II. The Saudi–Emirati Rivalry: From Cold Competition to Open Confrontation
II.i. The Structural Foundations of the Rivalry
What the document's original draft described as a 'restrained but consequential strategic competition' has, as of early 2026, crossed into direct confrontation. The roots are structural and long-standing. Saudi Arabia's Vision 2030 transformation agenda—under Crown Prince Mohammed bin Salman—seeks to reposition Riyadh as the financial, logistical, and technological nucleus of the Arab world. Flagship initiatives, including NEOM, Riyadh Air, and the 'Program HQ' requirement compelling multinationals to base regional headquarters in the Kingdom, directly challenge Dubai's status as the Gulf's pre-eminent commercial gateway. Meanwhile, the UAE's 'Projects of the 50' framework seeks to consolidate Emirati leadership in trade, fintech, artificial intelligence, advanced manufacturing, and renewable energy. What were once complementary economic models have become directly competitive.
The character of the rivalry is also ideological. The UAE's foreign policy is anchored in a consistent antagonism toward Islamist political movements, viewing them as existential threats regardless of their formal legitimacy. Saudi Arabia, by contrast, has pursued a de-risking posture—seeking to insulate Vision 2030 from geopolitical volatility by restoring relations with former adversaries including Qatar, Turkey, and, via the 2023 China-brokered deal, Iran itself. These divergent strategic philosophies translate into incompatible end-state visions for Yemen, Sudan, Somalia, Libya, and Syria.
II.ii. Yemen: From Divergence to Direct Coercive Signalling
The Yemen theatre provided the flashpoint that transformed latent rivalry into observable confrontation. On December 29, 2025—one day after GCC summit leaders met in what was publicly framed as a demonstration of Gulf unity—Saudi forces conducted airstrikes on the port of Mukalla, targeting what Riyadh described as an Emirati weapons shipment to the UAE-backed Southern Transitional Council (STC). The timing was read in Riyadh as deliberate provocation: the STC had launched its advance into Saudi Arabia's strategically vital border provinces of Hadramawt and Mahra on December 3, the very day of the GCC summit.
The Saudi response was decisive. Saudi-backed forces recaptured the seized provinces within days. Under intense diplomatic and military pressure, the STC agreed to talks, its leader Aidarous al-Zubaidi was expelled from Yemen's Presidential Leadership Council, and on January 7, 2026, al-Zubaidi fled the country. The STC was effectively dissolved. The UAE announced a full withdrawal of its forces from Yemen by December 30, 2025—a move interpreted as de-escalation under duress. Saudi Arabia separately announced plans to allocate approximately $3 billion to Yemen's reconstruction in the wake of the UAE's exit, signalling its intention to consolidate control over the post-war political settlement.
The Yemen confrontation signals that the Saudi–Emirati rivalry has moved beyond economic competition and proxy friction into direct coercive signalling—a qualitative threshold with implications for GCC coherence and regional order.
The rivalry's geographic theatre extends well beyond Yemen. In Sudan, Riyadh backs the Sudanese Armed Forces while the UAE is widely documented as a primary supporter of the Rapid Support Forces. During Crown Prince Mohammed bin Salman's visit to Washington in November 2025, he reportedly urged the Trump administration to increase pressure on the UAE over its Sudanese role. In Somalia, Saudi Arabia has rallied support for national unity following Israeli recognition of Somaliland—a move perceived as connected to Emirati strategic interests in the Horn of Africa. In Libya, Saudi Arabia coordinated with Egypt to restrict UAE access to airspace and logistical routes used to supply the RSF. The rivalry has, in effect, become a pan-regional contest.
II.iii. Military Balance and Strategic Risk Tolerance
A conventional military comparison still favours Saudi Arabia in aggregate capacity. The Royal Saudi Armed Forces field approximately 250,000 active-duty personnel, compared with roughly 65,000 in the UAE. The Royal Saudi Air Force operates one of the largest and most modern fleets in the region, including over 280 advanced fighter aircraft, supported by extensive air defence networks and missile capabilities. The UAE maintains a smaller but highly professional force, often described as technologically sophisticated and operationally integrated. In qualitative domains—particularly missile defence, cyber operations, and AI-enabled surveillance—the UAE has invested heavily in next-generation capabilities, including cooperation with Israel facilitated by the Abraham Accords normalization framework.
Saudi Arabia signals deterrence through magnitude and endurance; the UAE signals through precision, technological edge, and coalition agility. The Yemen episode demonstrated, however, that Saudi Arabia retains the capacity and political will for direct coercive action against Emirati interests when its core security perimeter is threatened. That willingness to escalate alters Emirati probability assessments regarding the costs of continued regional activism.
Fiscal capacity introduces a complicating variable. Saudi Arabia faces mounting fiscal pressures as low oil prices and Vision 2030's massive capital requirements strain the Kingdom's budget. The dismissal of Saudi Investment Minister Khalid al-Falih in late 2025, following his public acknowledgement of the need to reassess certain megaprojects, underscored the tension between geopolitical ambition and fiscal constraint. The UAE, meanwhile, allocates smaller but more efficiently deployed resources, focusing on niche superiority, portfolio diversification, and technology leverage.
II.iv. Implications for Gulf Coherence
For G7 policymakers, the Saudi–Emirati fracture has three immediate consequences. First, it undermines GCC solidarity as a collective security framework at precisely the moment when coordinated Gulf signalling could most influence Iranian behaviour during nuclear negotiations. Second, it creates information asymmetries that complicate Western security planning—Gulf capitals may be pursuing incompatible objectives simultaneously. Third, it generates spillover risks across the Red Sea, Horn of Africa, and Indian Ocean littoral, affecting maritime security corridors of global importance.
III. Operation Midnight Hammer and Its Aftermath: Bayesian Updating in the Gulf
III.i. The Strikes and Their Immediate Consequences
On the night of June 21–22, 2025, the United States executed Operation Midnight Hammer—the largest B-2 Spirit operational strike in American military history. Seven B-2 bombers flying from Whiteman Air Force Base, Missouri, executed an 18-hour mission requiring multiple mid-air refuellings, dropping 14 GBU-57A/B Massive Ordnance Penetrator bunker-buster bombs on the Fordow and Natanz nuclear enrichment facilities. Simultaneously, a US submarine launched more than two dozen Tomahawk cruise missiles against above-ground infrastructure at the Isfahan Nuclear Technology Center. The strike package involved over 125 aircraft in total, including F-22 and F-35 fighter jets deployed in a deception and suppression role. No Iranian aircraft took to the skies; no Iranian surface-to-air missiles were launched against the strike package.
Iran retaliated by striking Al Udeid Air Base in Qatar—the regional headquarters of US Central Command, hosting approximately 10,000 American personnel—with short- and medium-range ballistic missiles, causing no reported US casualties. President Trump declared a ceasefire on June 24, 2025, bringing the Twelve-Day War to its formal end. Iran has not acknowledged the ceasefire. Supreme Leader Khamenei, in his first televised remarks on June 26, declared victory and vowed further strikes on US bases in response to any future attack.
A July 2025 Pentagon damage assessment estimated that Iran's nuclear programme had been set back approximately two years. However, independent analysts—including the Institute for Science and International Security—offered a more cautious assessment: above-ground infrastructure was severely damaged but the extent of damage to deeply buried facilities, particularly at Fordow, remains uncertain. Iranian Foreign Minister Araghchi stated publicly that Iran had 'reconstructed everything that was damaged,' a claim satellite imagery partially corroborates.
III.ii. Iran's Reconstitution Strategy
The most significant strategic development of the post-Midnight Hammer period—and one with profound implications for Gulf security—is Iran's accelerating nuclear reconstitution programme. Satellite imagery from November 2025 through February 2026 documents a consistent and deliberate pattern: Iran is not simply rebuilding; it is dispersing, concealing, and hardening its nuclear infrastructure against future strikes.
At the Pickaxe Mountain (Kuh-e Kolang Gaz La) site south of Natanz, excavation has intensified, with tunnelling estimated to reach 80–100 metres under hard granite—a depth calculated to defeat the GBU-57 MOP bomb used in Operation Midnight Hammer. At Isfahan, all three tunnel entrances to the nuclear complex have been buried under soil since February 2026. New satellite imagery shows concrete being poured over tunnel entrance extensions to provide additional protection. At a surface site in Isfahan destroyed in June 2025, a new structure with architectural features identical to the centrifuge production facility in Karaj was erected between December 2025 and January 2026, apparently to conceal resumed centrifuge-related manufacturing activities from satellite observation.
Iran's reconstitution strategy reflects a fundamental lesson from the June 2025 strikes: depth and dispersion, not passive deterrence, are the foundations of nuclear programme survivability. The Islamic Republic is rebuilding a programme specifically engineered to resist the weapons that destroyed it.
The January 2026 orchestrated unrest, emerging against a backdrop of intensifying economic hardship and culminating in the deaths of numerous security personnel, demonstrators, and rioters, has materially altered Iran’s internal political equilibrium. Allegations that a subset of participants benefited from external financial backing have further deepened official suspicions of foreign interference. Together, these developments have significantly reshaped the Iranian leadership’s threat perception. As many analysts observe, the nuclear program has assumed heightened strategic centrality—viewed increasingly as a guarantor of regime continuity—particularly in light of explicit statements by U.S. policymakers expressing support for political change in Tehran.
III.iii. Bayesian Belief Updating by Gulf States
For Gulf Arab states observing the Midnight Hammer strikes and their aftermath, the primary lesson was not about Iran's vulnerability but about the nature and limits of American protection. The strikes confirmed US capacity for decisive kinetic action at operational reach unprecedented in the post-Cold War era. Yet they also revealed the bounded character of US intervention: punitive, time-limited, designed to avoid prolonged entanglement, and constitutionally contested within Washington—congressional leaders were notified only after the aircraft were safely out of Iranian airspace.
From Riyadh and Abu Dhabi's perspective, this generated a consequential posterior belief update: the United States is no longer an unconditional, open-ended security guarantor but a powerful and transactional protector whose engagement is contingent on alignment, burden-sharing, and Washington's shifting domestic political constraints. Both Gulf states have responded by intensifying hedging behaviour—expanding economic and technological engagement with China, exploring BRICS+ mechanisms, and diversifying defence suppliers—not as realignment but as risk distribution.
Kuwait's role as a barometer of US credibility has been further clarified by events. Kuwait's dual status—as host to US military logistical facilities and as a nation geographically exposed to Iranian missile forces and Iraqi militia networks aligned with Tehran—makes it a high-sensitivity node in any escalation scenario. The parliamentary constraints on Kuwaiti executive authority reinforce its consistent preference for de-escalation frameworks and mediation diplomacy. Within GCC deliberations, Kuwait functions as a 'low-voltage stabiliser,' moderating collective signalling and complicating any effort to portray the Council as a unified anti-Iranian bloc.
IV. Internal Dynamics: The UAE Federal Bargain Under Stress
For G7 policymakers assessing Gulf stability, it is essential to recognise that the United Arab Emirates is not a monolithic strategic actor but a federal polity sustained by an implicit distributional and security compact among its seven emirates. Since its founding in 1971, the UAE has operated under a carefully calibrated 'federal bargain': Abu Dhabi provides hydrocarbon wealth, defence guarantees, and foreign policy direction; Dubai and the Northern Emirates contribute commercial dynamism, demographic scale, and diversified economic activity.
The Yemen confrontation of late 2025 has introduced new stress into this equilibrium. Abu Dhabi, under President Mohamed bin Zayed Al Nahyan, engineered the Emirati intervention strategy in Yemen and cultivated the STC as an instrument of maritime influence over Aden, Mukalla, and critical Red Sea chokepoints. The forced withdrawal of December 2025—executed under Saudi coercive pressure—represents the most significant reversal of Emirati regional strategy in the post-2015 intervention period. Its impact on Abu Dhabi's strategic confidence and domestic legitimacy is not fully visible but analytically significant.
Dubai, led by Vice President and Prime Minister Mohammed bin Rashid Al Maktoum, has historically prioritised stability, capital inflows, and insulation from geopolitical volatility. The Yemen confrontation, combined with ongoing Iran-related uncertainties, has generated measurable commercial anxiety. Insurance premiums for shipping through Emirati ports, aviation risk assessments for Dubai International, and real estate capital flight concerns create a channel through which geopolitical confrontation translates into domestic economic strain. Abu Dhabi bears strategic risk; Dubai and the Northern Emirates bear the economic spillover.
The Northern Emirates—particularly Sharjah, with its more conservative orientation and cultural affinities closer to Saudi Arabia's model—add further differentiation. While no overt institutional opposition to federal foreign policy has emerged, the Saudi–Emirati confrontation in Yemen has introduced visible intra-federal discomfort. The federation's resilience rests on Abu Dhabi's redistributive fiscal capacity, integrated federal defence forces, and centralised intelligence architecture. Its vulnerability lies in the asymmetric distribution of geopolitical risk: should a sustained Saudi–Emirati confrontation or an Iranian retaliatory strike impose material damage on Dubai's economic model, the durability of the federal bargain would face its most serious test since the federation's founding.
V. Qatar and Turkey: Mediation Architecture and Security Depth
V.i.Qatar as Bridge Node
Qatar has re-emerged as the Gulf's principal diplomatic intermediary following the 2021 GCC reconciliation that ended the blockade crisis. Leveraging its hosting of the US Combined Air Operations Center at Al Udeid—the command hub for Operation Midnight Hammer—long-standing communication channels with Tehran, and active mediation portfolios from Afghanistan to Gaza, Doha positions itself as a strategic 'middle power broker' whose value derives precisely from its willingness to maintain dialogue with adversarial networks simultaneously.
In the Iran nuclear negotiation process of 2026, Qatar has played a structurally important facilitative role. The Atlantic Council noted in February 2026 that the foreign ministers of Turkey, Qatar, Egypt, Oman, the UAE, Saudi Arabia, and Pakistan were all engaged in the Istanbul diplomatic framework that provided the context for the Witkoff–Araghchi talks. Qatar's utility in this architecture is its capacity to transmit signals across adversarial networks without formal alignment—a function that lowers the probability of miscalculation and reduces informational asymmetry.
Qatar's strategy is not ideological alignment but regime security through indispensability. In Bayesian terms, it functions as a bridge node in a networked strategic game: the more critical its mediating role becomes, the higher the cost for any major power to marginalise or coerce it. Its maintenance of pragmatic economic ties with Iran—particularly around shared North Field/South Pars gas infrastructure—simultaneously enhances its credibility with Tehran and complicates Western pressure campaigns.
V.ii. Turkey as Security Anchor
Turkey's regional role reflects a transformation from ideological rival to pragmatic security partner for key Gulf states. Under President Recep Tayyip Erdoğan, Ankara recalibrated relations with Riyadh and Abu Dhabi following a period of sharp tension in the late 2010s. The 2025–2026 period has witnessed deepening defence-industrial cooperation, including drone technology transfers, joint training, and intelligence coordination. Turkey's globally recognised unmanned aerial vehicle capabilities—refined in multiple operational theatres—provide Gulf partners with scalable deterrence tools against both state and non-state threats.
An emerging trilateral security alignment among Turkey, Saudi Arabia, and Pakistan—informally described in regional security circles as a developing strategic architecture—illustrates Ankara's repositioning as a 'security anchor.' For Riyadh, Turkish defence technology offers diversification beyond Western suppliers at a moment when the transactional character of US security provision is increasingly apparent. For Ankara, Gulf capital supports domestic defence industries and macroeconomic stabilisation. Turkey's posture in the Iran context is carefully calibrated: Ankara continues importing Iranian oil and gas—a point Turkish Foreign Minister Fidan affirmed publicly following the January 2026 riots —while quietly reinforcing Gulf defensive capacity. The effect is to raise the cost of Iranian escalation without overtly formalising an anti-Iran bloc.
VI. The Iran Crisis of January–February 2026: Internal Fragility and External Hardening
VI.i.The Protests and the January Orchestrated Riot
In late January 2026, amid escalating economic distress and mounting U.S. military deployments in the region, a wave of protests culminated in what Iranian authorities described as an orchestrated riot. The unrest—occurring against the backdrop of sanctions-induced contraction, currency instability, and high inflation—resulted in the deaths of numerous security personnel, protesters, and bystanders. The episode intensified the regime’s perception of internal vulnerability while reinforcing its conviction that external actors were actively seeking to exploit domestic grievances.
In a January 28, 2026 podcast interview with Professor Jeffrey Sachs, hosted by Professor Glenn Diesen, Sachs argued that recent U.S. and Israeli actions toward Iran reflected a long-standing regime-change strategy. He contended that military pressure, economic sanctions—described by U.S. officials as “economic statecraft”—and diplomatic maneuvers were components of a broader hybrid campaign aimed at weakening and ultimately overturning the Iranian government. Sachs maintained that the objective was not negotiation per se, but structural political transformation in Tehran, pointing to the collapse of the Joint Comprehensive Plan of Action following the U.S. withdrawal under Donald Trump as evidence of limited American commitment to sustained diplomacy.
Similarly, in a January 14, 2026 interview with Daniel Davis, Professor John Mearsheimer advanced a parallel thesis. He described the unrest as fitting within what he characterized as a four-stage regime-change playbook: first, the systematic use of sanctions to generate economic distress; second, the encouragement and amplification of protest movements; third, an international information campaign framing the unrest as purely indigenous and inevitable; and fourth, potential direct military intervention should internal destabilization reach a decisive threshold. Mearsheimer further suggested that technological enablers—such as satellite internet access reportedly used during communication blackouts—illustrated the degree of external facilitation.
Whether one accepts these interpretations in full or in part, their analytical relevance lies in how they mirror Tehran’s own threat perceptions. Iranian officials have repeatedly framed the January unrest not as spontaneous dissent but as externally catalyzed destabilization. Allegations that some participants received foreign financial or logistical support—though difficult to independently verify—have reinforced elite suspicions of coordinated interference. The result has been a paradoxical dual dynamic: acute internal fragility coupled with intensified external hardening. The leadership, confronting domestic strain, has simultaneously doubled down on deterrent capabilities as insurance against perceived regime-change efforts.
VI.ii. The Nuclear Reconstitution and February 2026 Negotiations
As of mid-February 2026, the U.S.–Iran diplomatic channel remains active yet precarious. An initial indirect round of talks took place in Oman on February 6, mediated through Omani intermediaries, with U.S. envoys engaging separately from Iranian Foreign Minister Abbas Araghchi. A second round convened in Geneva on February 17. On that same day, Iran announced the temporary closure of the Strait of Hormuz for live-fire naval exercises—an unmistakable signal that diplomacy would proceed in parallel with calibrated coercive leverage.
The substantive divide between the parties remains profound. Washington’s position, articulated by Secretary of State Marco Rubio, reportedly calls for a permanent end to uranium enrichment, stringent limitations on Iran’s ballistic missile program, and the curtailment of support for regional proxy networks—conditions acknowledged even by U.S. officials as likely incompatible with Tehran’s baseline demands. Iran, for its part, insists that negotiations be confined strictly to the nuclear file and maintains that enrichment constitutes a sovereign right under the Non-Proliferation Treaty framework. Tehran has also resisted expanded inspections of sites struck during the June 2025 conflict, while the International Atomic Energy Agency has indicated that it cannot fully verify the disposition of approximately 400 kilograms of uranium enriched to 60 percent prior to the war.
The February naval exercises—and the temporary disruption of traffic through the Strait—carry substantial strategic implications. Roughly one-fifth of globally traded oil transits that narrow maritime corridor. By demonstrating its capacity to threaten this chokepoint, Iran signaled that escalation would not be geographically contained. The costs of diplomatic breakdown would reverberate through global energy markets and the Gulf economies whose fiscal stability depends on uninterrupted export flows.
From a Bayesian perspective, these moves represent deliberate signaling under uncertainty. Tehran appears to be updating its assessment of U.S. intentions in light of military deployments and regime-change rhetoric, while Washington and its regional partners are recalibrating their estimates of Iran’s escalation thresholds. The resulting equilibrium is inherently unstable: internal pressures push the regime toward consolidation and deterrent reinforcement, while external pressures narrow the diplomatic bandwidth for compromise.
In this environment, nuclear capability is increasingly perceived by Iranian decision-makers not merely as a bargaining chip, but as a structural hedge against systemic overthrow—transforming the crisis from a negotiable dispute into a contest over regime survival itself.
VII. Bayesian Analysis of Escalation Pathways in 2026
Given the developments of January–February 2026, the escalation scenarios sketched in earlier analyses require updating. Three principal pathways remain analytically distinct, though their probability weightings have shifted significantly.
VII.i. Scenario A: Sustained Diplomatic Fragility (Highest Probability)
The most probable scenario—and the modal outcome of the current trajectory—is a prolonged period of diplomatic fragility in which negotiations continue without resolution, Iranian nuclear reconstitution advances, and the military stand-off is managed through episodic coercive signalling from both sides. In this scenario, Iran continues building deeper hardened facilities, retains its HEU stockpile as a bargaining chip, and manages internal unrest through securitisation rather than political reform. The US sustains its naval and air presence in the region as a deterrent—Trump announced on January 28, 2026, that 'a massive Armada is heading to Iran'—without delivering a military strike. Gulf states maintain their hedging posture: formally aligned with Washington, but refusing to provide airspace or bases for offensive action, while deepening economic ties with China as insurance.
For Gulf states, this scenario involves elevated but manageable risk: oil price volatility, insurance premium pressures for Gulf shipping, and continuing uncertainty around US security commitments. The Saudi–Emirati rivalry continues below the threshold of direct military confrontation, though proxy competition in Sudan, Somalia, and Syria persists. Saudi Vision 2030 faces fiscal pressure from the combined weight of low oil prices, geopolitical uncertainty, and the absence of the FDI inflows Riyadh requires to deliver transformative economic change.
VII.ii. Scenario B: Regional Conflagration (Medium Probability, Elevated vs. Prior Estimates)
VII.iii. Scenario C: Regime Implosion in Iran (Low Probability, Structurally Salient)
The low-probability yet structurally consequential scenario involves regime fragmentation within Iran rather than an orderly political transition. Despite the scale of the January 2026 unrest with its foreign component and ongoing external interference, the security apparatus has thus far remained cohesive. By late January, the state had reasserted effective territorial control, and large pro-regime mobilizations during the anniversary of the 1979 Revolution signaled continued organizational capacity and core-base loyalty. Absent coordinated armed opposition, sustained elite defection, or fractures within the Revolutionary Guard command structure, outright regime implosion remains less likely than continued consolidation—potentially maintained through intensified effort to improve economic condition.
For Gulf monarchies, this scenario presents a strategic paradox: long-term geopolitical opportunity coupled with acute near-term instability. The eventual removal of a hostile regime in Tehran could fundamentally reshape regional alignments. However, the short- to medium-term consequences of state fragmentation would be profoundly destabilizing. These could include refugee flows across maritime and land corridors; proliferation risks associated with unsecured nuclear materials; and the reconfiguration of Iranian-backed militia networks operating in Iraq, Syria, and Lebanon into more autonomous, less controllable actors.
Such instability would be particularly alarming for smaller Gulf states. Kuwait and Bahrain would face heightened sectarian and internal security pressures, while unrest could reverberate into Saudi Arabia’s oil-producing Eastern Province. In the current strategic environment, power vacuums inside Iran would not produce a clean geopolitical reset; rather, they would generate a volatile security landscape marked by fragmented authority, contested armed networks, and elevated proliferation risks.
Scenario C therefore remains low in immediate probability but high in structural significance—its consequences, should it materialize, would likely prove more unpredictable and systemically destabilizing than either negotiated détente or managed confrontation.
VIII. Policy Guidance for the G7
For G7 leaders, the central challenge is managing instability without deepening intra-Gulf fragmentation or incentivising Iranian escalation. The following analytical prescriptions flow from the Bayesian framework developed above.
First: Treat Saudi Arabia and the UAE as Distinct Strategic Partners. The Saudi–Emirati divergence is structural, not episodic. Attempting to impose artificial GCC unity risks misreading the region's internal evolution and generating resentment from both capitals. G7 policy coordination should be modular rather than bloc-based, allowing differentiated cooperation in defence, technology, and infrastructure. Washington in particular should avoid taking sides in the Yemen/Sudan/Horn of Africa theatres, where the costs of perceived alignment with either Riyadh or Abu Dhabi are high and the benefits minimal.
Second: Build Supply-Chain and Energy Resilience Through Geographic Redundancy. Investment in the India–Middle East–Europe Economic Corridor (IMEC) is strategically sound, but corridor design should explicitly incorporate Oman as an alternative maritime and logistics node. Diversifying entry and exit points reduces vulnerability to Hormuz disruption—as Iran demonstrated on February 17, 2026—and signals that global trade architecture will adapt rather than collapse under coercion. Such redundancy lowers the expected payoff for any actor contemplating maritime disruption.
Third: Anchor Nuclear Diplomacy in Verified Constraints Rather Than Zero-Enrichment Maximalism. The current US negotiating position—permanently ending Iranian enrichment as a precondition—is, as Secretary Rubio acknowledged, potentially incompatible with any achievable deal. A more durable framework would prioritise verifiable constraints: stockpile caps on enriched uranium, enhanced IAEA monitoring, enrichment-level ceilings, and sequenced sanctions relief tied to compliance milestones. The February 2026 talks in Geneva should be evaluated not as a path to a comprehensive agreement but as a mechanism for reducing the most acute near-term weaponisation risks.
Fourth: Recalibrate Security Guarantees from Rhetoric to Capability. Advanced integrated air and missile defence systems—including updated Patriot and THAAD architectures, counter-drone technologies, and shared early-warning networks—would materially reduce Persian Gulf vulnerability to the asymmetric retaliation Iran has demonstrated it can deliver. Gulf states denied US airspace access during the January–February 2026 stand-off specifically because they assessed that the risk of Iranian retaliation against their territory exceeded the benefits of American offensive operations. Credible defensive commitments that reduce the vulnerability of Gulf infrastructure to Iranian strikes would alter this calculus without requiring Gulf states to cross the threshold of overt anti-Iranian alignment.
IX. Conclusion: Probabilities, Power, and the Future of Gulf Order
The Persian Gulf is entering a phase defined less by fixed alliances and more by probabilistic calculation under conditions of deep uncertainty. The Saudi–Emirati rivalry has crossed from structural competition into direct confrontation. Iran, damaged but not defeated by the June 2025 strikes, is rebuilding its nuclear programme with specific engineering choices designed to defeat the weapons that damaged it—while navigating the most severe domestic legitimacy crisis in its post-revolutionary history. The January 2026 unrest and its externally orchestrated riots have simultaneously weakened the Iranian government's social contract and intensified its nuclear resolve as a survival strategy. Diplomatic negotiations in Oman and Geneva remain fragile, while Iran continues to improve its economic leverage and defence through naval exercises and Hormuz closure threats.
Qatar's mediation architecture and Turkey's security engagement expand the decision-tree confronting Saudi Arabia and the UAE, complicating any simple binary framing of the regional order. Kuwait functions as a credibility barometer for US security commitments, whose assessment by GCC states will shape the intensity of hedging behaviour across the region. The coherence of the GCC as a collective security framework is at its lowest point in decades.
For the G7, the strategic imperative is to reduce uncertainty rather than amplify it. Clear, credible, and narrowly defined security commitments; diversified trade corridors; verifiable and pragmatic nuclear governance; and respect for intra-Gulf differentiation together create a stabilising architecture. The alternative—forcing binary alignments in a region that increasingly resists them, or treating an unachievable maximalist diplomatic position as evidence of strategic resolve—would accelerate hedging behaviour and raise the probability of miscalculation.
Stability will depend on whether successive updates to strategic beliefs push actors toward deterrence equilibrium—or toward the cascading escalation that all publicly claim to wish to avoid. As of February 18, 2026, that question remains genuinely open.
Ultimately, the Israel–Iran confrontation will not be decided solely by military exchanges but by how regional states interpret and respond to evolving signals. Bayesian learning is not an academic abstraction; it is the lived logic of Gulf statecraft. The Islamic Republic's nuclear reconstitution, the Saudi–Emirati confrontation in Yemen, Iran's temporary Hormuz closure on February 17, and the fragile Geneva diplomatic track are all simultaneously unfolding data points in a belief-updating process whose outcome will shape the Persian Gulf order—and by extension, global energy markets, great-power competition, and the future of nuclear non-proliferation—for a generation.
