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Welcome to The Geopolity’s What We’re Watching (3W), our daily look at the interconnected worlds of Geopolitics, Economics and Energy. Curated from the world’s leading sources of information, our analysis and commentary is designed to help you make sense of the events driving the major developments in the world.
In our most recent analysis, we highlighted the fact that the US – Israel Alliance War on Iran remains in a stalemate, painful for all involved. And this includes Saudi Arabia, as both Iran and the Alliance have sought to drag it out, in order to increase the pain on the other side. In other words, the pain resulting from this “unprovoked war of choice” by the Alliance is the worst kind of pain: not only severe and worsening, but also spreading.
As to the latter point of the spreading of pain, on Tuesday Pakistan’s Defense Minister Khawaja Muhammad Asif said his country will use “whatever means are available” to defend Saudi Arabia against Iran-backed AnsarAllah in Yemen, writes The Associated Press. “I’m not going into detail, but obviously when I say that we are bound by this arrangement to defend Saudi Arabia, that means whatever means are available at our disposal, they’ll be available to Saudi Arabia also. I think that’s a categoric statement.” Asif described the Houthis as aggressors and said Pakistan’s commitment to Saudi Arabia was unambiguous. “Any enemy of Saudi Arabia is enemy of Pakistan. That should be very clear,” he said. 3W notes these remarks make clear that the risk of Pakistan being dragged into the War on Iran as well, is real. 3W previously analysed this risk, the reasons for it, and its likely con sequences.
In the 3W view, the developments in Yemen and, by extension, Saudi Arabia are also triggering developments across the Red Sea in East Africa.
Israel has been operating in the region, as evidenced by its recent “recognition” of the breakaway region of Somaliland as an independent state. On 26 December 2025, Israeli prime minister Benjamin Netanyahu announced Israel’s recognition of Somaliland as a sovereign state. This made Israel the first UN member to do so. US officials defended the move, although it constitutes meddling in the internal affairs of a sovereign state, since Somaliland is part of Somalia. As The Conversation writes, there is a strategic calculation behind this move, as the area sits along the Gulf of Aden at the Horn of Africa, a key corridor linking the Mediterranean, the Middle East and the Indian Ocean. The Times of Israel writes the move was part of Israel’s post 7 October strategy. In the 3W view, this particular strategy seeks to transform the broader Middle East, via annexation of the lands immediately bordering Israel (Gaza, West Bank, southern Lebanon, Golan Heights), submission via Abraham Accords of the first ring countries (Jordan, Syria, Saudi Arabia, Egypt), and destruction of the second ring countries through war (Iran and Turkiye).
There are also indications Israel is meddling in another country bordering the Red Sea, Eritrea. The Jerusalem Post recently wrote a long analysis of the movement based in Tel Aviv that is preparing a “colour revolution” in Eritrea. This one is supposed to be blue. At 3W we remind our audience that there are strong indications the US had a hand in the original colour revolutions, the Rose Revolution in Georgia, the Orange Revolution in Ukraine, and the Tulip Revolution in Kyrgyzstan. Haaretz writes that this movement is trying to bring Eritreans from around the world together, in order organize a revolution against the current, “dictatorial” Eritrean government.
In northern Ethiopia’s Tigray region, home to a majority of the Beta Israel community of Ethiopian jews, fighting has flared up again. Regional, pro-independence forces seized control of three airports and clashed in multiple locations with federal troops, signalling the start of a major offensive, writes Reuters.
While all this is happening across the Horn of Africa, the US has started warning that AnsarAllah in Yemen is cooperating with Al Shabab in Somalia, writes The Financial Times. AnsarAllah have sold weapons to Al Shabaab, trained hundreds of fighters in drone and explosive use and frequently travelled to areas of southern Somalia controlled by the al-Qaeda affiliate, the US says. And this traffic between Yemen’s resurgent AnsarAllah and Al Shabaab now represents a serious danger to global trade, oil flows and shipping, the US says. All this leaves us at 3W with the distinct impression that the US – Israel Alliance is looking at bringing the African Red Sea Coast under its control through revolutions and wars, in order to counter Iran’s resistance strategy involving Yemen.
As to the current and worsening pain, crude oil flows from the Middle East are returning toward pre-war levels, say investment banks JP Morgan and Goldman Sachs, according to Bloomberg. According to JP Morgan, shipments of crude oil have rebounded to 17.5 million barrels a day, or 98% of pre-war levels, while flows of products such as diesel and gasoline were at 3 million barrels a day, or 58%, according to JPMorgan. The overall figure was 89% of 2025 levels, measured by the 10-day average over the past five days. According to Goldman Sachs, oil exports from the Persian Gulf — including so-called dark flows moved clandestinely — have recovered to 23.3 million barrels a day over the last week, a level in line with the 2025 average.
Javier Blas of Bloomberg agrees with the assessment, and concludes from it that the US is winning the Battle over Hormuz from Iran. The main reason oil prices nevertheless remain above $100 per barrel is, he says, the fear among oil traders that Iran will now likely escalate the war in order to compensate for its loss of control over Hormuz.
3W notes that this assessment by America’s prominent investment banks aligns with the statements of confidence coming out of the Trump administration, which we discussed earlier this week. In order to provide the contrarian view that spurs on thinking and reflection, 3W notes that Blas also says the current US victory is probably not sustainable. Chartering supertankers costs an average $30 million per Hormuz crossing, equal to roughly $15 per barrel. Trita Parsi, speaking to Judge Napolitano, says that in addition, the cost of the US military escorting ships through the Strait of Hormuz is so staggering, it simply isn’t sustainable.
In other words, as we said on Monday, things are far from black-and-white, “we are winning and you are losing”. Both sides continue to suffer deeply in this war, and the key question remains who will first refuse to take the pain any longer.
In this regard, The Financial Times writes that US long-term borrowing costs climbed to their highest level in almost a quarter of a century on Tuesday. The yield on the 30-year US Treasury rose 0.06 percentage points in afternoon trading in New York to 5.62 per cent, its highest level since June 2002. The 10-year Treasury yield rose as much as 0.05 percentage points to 5.29 per cent, pushing benchmark borrowing costs in the US to another post-2007 high.
Meanwhile, the EU has spent an extra €100bn on fossil fuels since the start of the US-Iran war for the same volume of imports, The Financial Times also writes. Dan Jørgensen, EU energy commissioner, said, “It’s now €100bn that we’ve paid extra for our energy this year, without receiving one extra molecule of gas or oil”. He also said the bloc’s energy ministers spoke at a summit in Dublin about releasing the remainder of the strategic petroleum stocks committed to in March “to alleviate price pressure” as fuel costs rise.
Nevertheless, despite the severe, worsening and spreading pain, signs are that neither the US nor Iran is inclined to compromise at this stage. Axios writes that the efforts this week by Qatari mediators to broker a diplomatic breakthrough between the US and Iran have made little progress.