Nowhere is this more evident than in the Middle East, where overlapping crises in Gaza, Lebanon, Syria, Yemen, Libya, and Sudan intersect with global energy markets, maritime trade, and major power confrontations.
Global geopolitics in 2025 was shaped by three reinforcing dynamics:
1- Fragmenting great-power competition: Major powers increasingly pursued selective economic decoupling, strategic hedging, and competitive influence-building. The recalibration of U.S.–China relations, combined with Russia’s assertive posture, intensified geopolitical fragmentation.
States across Asia, the Middle East, and Africa were compelled to diversify partners and develop multi-vector foreign policies. All of these shifts heightened Western anxieties about the potential challenge to their primacy.
2- Trade route vulnerability and supply-chain repricing: Maritime insecurity—including in the Red Sea—reconfigured global logistics. Shipping rerouted around the Cape of Good Hope increased transit times and insurance costs, contributing to inflationary pressures.
The world was reminded that chokepoints such as Bab al-Mandeb, the Suez Canal, and the Strait of Hormuz remain critical to geo-economic stability.
3- Energy transition tensions: As the global energy transition advanced, traditional hydrocarbon producers faced the dual challenge of preserving short-term revenue while preparing for long-term diversification. Competition over critical minerals, technology access, and green industrial capacity added further geopolitical stress points.
These global forces intersected with Middle Eastern dynamics, amplifying both vulnerabilities and the region’s strategic weight.
The year exposed deep fault lines across the Middle East. The region was not merely the site of multiple crises—it became the arena where global and regional power agendas converged, often at cross-purposes.
- Gaza and the Israeli–Palestinian conflict: Despite intermittent ceasefires and diplomatic efforts, Gaza remained trapped in a “no-war/no-peace” condition. Humanitarian deterioration, political fragmentation, and security uncertainties ensured that neither side could claim stability.
The absence of a political horizon perpetuated cycles of escalation, making spillover risks high. A year-end 20-point Gaza agreement, framed by ceasefires, created circumstances that could facilitate fulfilling Palestinian aspirations.
The conflict now stands at a tenuous precipice, caught between the possibility of political fulfillment through a two-state solution and the grim prospect of endless occupation accompanied by asymmetrical violent confrontation.
- Lebanon: Lebanon remained vulnerable to escalation along its southern border. Hezbollah’s posture, Israeli unilateral deterrence calculations, and the collapse of state institutions combined to create a highly combustible environment, further limiting the country’s capacity to absorb shocks.
- Syria: Syria continued as a multi-layered battleground for influence. Although large-scale combat subsided, competing interests of Russia, Iran, Turkey, Israel, the USA, and various non-state actors prevented any meaningful political settlement.
High-level political encounters, including between Russia and the USA, raised expectations, but security remained unstable and violence frequent. Reconstruction efforts stayed politicized and fragmented.
- Iran: Iran projected influence through aligned groups across the Levant and Yemen, while nuclear verification disputes kept diplomatic tensions high. Any miscalculation by the involved parties risked broader regional escalation, underscoring the need for sustained diplomatic engagement.
- Yemen: Attacks on Red Sea shipping—linked by the Houthis to the Gaza conflict—demonstrated how regional grievances could disrupt global trade. Although 2025 saw conditional pauses in attacks, the underlying political drivers in Yemen remain unresolved.
The Red Sea will remain strategically fragile unless incorporated into a broader regional security framework.
- Libya: Libya’s fragmentation deepened as fuel smuggling networks and rent-based patronage structures siphoned billions from the economy. Political stagnation and external interference continued to block unified governance, turning Libya increasingly into a hub of illicit trade and strategic competition.
- Sudan: Sudan’s conflict generated one of the world’s worst humanitarian crises in 2025. Rival factions fought for control over territory, ports, and resource routes, while external actors vied for influence.
The war economy entrenched itself, complicating prospects for a negotiated settlement.
Economic Pressures in the Middle East with Global Consequences
- Costlier supply chains: Rerouted ships, higher insurance premiums, and disrupted container flows increased transport costs and, for much of the year, reduced Suez Canal revenues before an upturn in the last quarter.
These dynamics affected markets from Europe to Asia, confirming the centrality of Middle Eastern maritime stability.
- Fiscal strain in fragile states: Countries such as Lebanon, Sudan, Yemen, and Syria faced mounting debt, limited revenue capacity, and reduced donor willingness. Economic collapse risked hardwiring political fragmentation and fueling migration flows.
- The Gulf’s strategic balancing: Gulf states continued investing in diversification, energy transition technologies, and global investments. Their sovereign wealth funds expanded influence, though balancing relations with both the U.S. and China remained a delicate strategic challenge.
Risks and Opportunities for 2026
Looking ahead, 2026 presents a mix of acute risks and navigable opportunities.
Key risks include:
1- Re-entrenchment of war economies: Libya, Sudan, and parts of Yemen risk consolidating illicit economies that undermine state recovery.
2- Unstable maritime environment: Should Gaza diplomacy falter, violence will almost certainly resume, with Palestinian civilians bearing the brunt of indiscriminate Israeli shelling and destruction. Red Sea maritime attacks could also quickly restart.
3- Escalation from Iran–Israel tensions: Even small-scale incidents could trigger broader conflict if diplomatic channels weaken or if Israel uses the “Iranian threat” to distract or relieve pressure, hindering progress toward resolving the Palestinian question.
4- Institutional collapse in fragile states: Lebanon and Syria may face intensified humanitarian and governance breakdowns.
Key opportunities include:
1- A Red Sea security compact: Regional and extra-regional states could institutionalize joint maritime protection and intelligence sharing.
2- Reconstruction-linked political deals: Conditioned, transparent reconstruction mechanisms can create incentives for de-escalation in Gaza and Sudan.
3- Energy transition partnerships: The Gulf can leverage its capital and infrastructure to shape new global energy and technology partnerships.
4- Cross-border infrastructure and economic integration: If security stabilizes, regional trade corridors linking the Levant, Gulf, and North Africa could generate substantial growth.
Policy Priorities: A Framework for Stabilization and Strategic Gains
For policymakers, several priorities should stand out for 2026. These mainly include sustaining and developing energetic diplomatic efforts on the following:
1- Palestine/Israel: Engagement should prioritize full and faithful implementation of the Gaza ceasefire agreement in its entirety toward a two-state solution.
2- Sudan: The brutal conflict in Sudan affronts our very humanity and must be a priority for the international community. Any potential division of Sudan would open a Pandora’s box with strategic implications for East African geopolitics.
3- Iran nuclear transparency and regional de-escalation: The goal is to prevent miscalculation rather than immediate strategic alignment.
4- Institutionalize Red Sea and Gulf maritime security: A joint security compact should combine naval escort arrangements, coordinated intelligence, risk-sharing insurance pools, and diplomatic mechanisms for de-escalation. Such a framework would reduce global trade vulnerability and remove incentives for maritime disruption.
5- Enhance Reconstruction in Gaza, Sudan, Libya, and Parts of Syria: Create multi-donor trust funds conditioned on transparency, procurement reform, and local inclusion, embedding independent oversight mechanisms. Economic assistance without governance reform risks reinforcing predatory networks.
6- Counter war economies and smuggling networks: Technical assistance should focus on customs modernization, subsidy reform, port governance, and forensic audits of state-owned enterprises. Breaking the financial incentives of conflict actors is essential for stabilization.
7- Support economic resilience in fragile states: Immediate priorities include food security and agricultural recovery in Sudan and Yemen, financial stabilization and governance support in Lebanon, development of local revenue capacity, and protection of essential services. These efforts help prevent humanitarian collapse from becoming a long-term geopolitical liability.
The Middle East enters 2026 at a crossroads. Persistent conflict in Gaza, fragility in Lebanon and Syria, entrenched war economies in Libya and Sudan, and volatility in the Red Sea carry global implications. Yet opportunities exist—through maritime security architecture, governance-linked reconstruction, and calibrated diplomacy—to arrest the region’s descent into deeper instability.
Policymakers face a task beyond crisis response. Strategic prevention requires building institutions where vacuums persist and aligning economic incentives with political stability. Pursued with consistency and coordination, 2026 could mark a turning point where the arc of instability begins to bend toward a more sustainable regional order rather than endless, inhumane bloodshed.
* The writer is a former Minister of Foreign Affairs of Egypt.
The article is published in collaboration with Future for Advanced Research& Studies, a think-tank based in Abu Dhabi.
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