What you need to know

Iran expands target set in GCC, as Saudi readies its backup pipeline for oil exports

International firms in Dubai and across the Gulf pulled staff from offices or shut branches on 12 March as Iran’s threat to strike U.S.- and Israel-linked banking and economic targets began to spread through the region’s commercial centers. Citigroup told employees to leave its offices in Dubai International Financial Centre and Oud Metha and shifted operations to remote work. Standard Chartered also evacuated its offices and told staff to work from home, while HSBC shut all its branches in Qatar. PwC closed offices in several Gulf states for the rest of the week as a precaution, and Deloitte also told staff to leave its DIFC office.

The immediate catalyst was Tehran’s warning, issued after an Israeli strike hit an administrative building linked to Bank Sepah, the large Iranian state-owned lender long associated with the military and the financial network of the Islamic Revolutionary Guard Corps. Iranian officials said economic and banking interests tied to the U.S. and Israel in the Gulf would become targets, extending the war’s reach from missiles, ports, and shipping lanes into the financial infrastructure that supports Gulf commerce.

The military and economic shock is spreading well beyond office towers. In Oman, drones hit oil storage facilities at the port of Salalah, setting fuel tanks ablaze and forcing the authorities into a firefighting operation at one of the Arabian Sea’s important energy hubs. Saudi Arabia, meanwhile, is moving to expand westward flows. Aramco expects Red Sea crude exports to reach a record in March, while the kingdom has relied more heavily on its East-West Pipeline, the long strategic artery built decades ago to move oil from the Gulf coast to the Red Sea if Hormuz became unusable. The system normally carries about 5m barrels a day, though it has previously handled around 7m after temporary modifications.

At sea, the threat picture has also worsened. At least 14 ship attacks have been recorded in the Gulf region since the war began on 28 February. Among the clearest confirmed incidents on 11 March were strikes on the Thailand-flagged bulk carrier Mayuree Naree north of Oman, the Japan-flagged container ship ONE Majesty northwest of Ras Al Khaimah, and the Marshall Islands-flagged bulk carrier Star Gwyneth northwest of Dubai. UKMTO separately reported that another container ship was hit by an unidentified projectile north of Jebel Ali on 12 March, causing a small fire, while specialist shipping outlets identified the vessel as the Liberia-flagged Source Blessing.

There were also separate tanker attacks in Iraqi waters near Basra, outside the Strait itself but still within the wider Gulf battlespace. The pattern is significant. The recent wave has not focused only on oil tankers. Bulk carriers, container ships, and fuel vessels have all come under attack across a broad arc stretching from the Strait of Hormuz to waters off Dubai, Jebel Ali, Oman, and southern Iraq. That suggests the danger now extends to general merchant traffic and regional trade infrastructure as much as to energy exports.

Taken together, the evacuations in DIFC, the closures in Qatar, the strike on Salalah, the Saudi diversion of crude toward the Red Sea, and the widening attacks on merchant shipping show a conflict that is no longer confined to military targets. It is now testing the Gulf’s two central claims to stability: that it can keep capital safe and that it can keep trade moving even under fire. As of today, both propositions are under growing strain.

The ultimate complex system

War spreads from the battlefield to the oil market

The United Nations Security Council has voted to condemn Iran as the Middle East crisis deepens, adopting a Bahrain-led resolution by 13 votes to none, with China and Russia abstaining. The vote reflected broad diplomatic support for the Gulf Arab states and Jordan, while also making clear that Moscow and Beijing were unwilling to back the measure outright.

The diplomatic move came as governments rushed to contain the war’s economic fallout. The Trump administration said it would release 172m barrels from the Strategic Petroleum Reserve as part of a broader, coordinated International Energy Agency effort to place 400m barrels of oil and refined products on the market. The IEA said the conflict had caused the largest oil-supply disruption in the history of the global market, with flows through the Strait of Hormuz falling from roughly 20m barrels a day to a trickle (though sanctioned Iranian oil still appears to be moving).

Still, the market reaction suggested that traders were not persuaded that reserve releases alone would be enough to absorb the shock. Oil prices continued to rise on 12 March, with both Brent and WTI moving higher as attacks on shipping and energy infrastructure increased fears of a prolonged supply squeeze.

The war is now feeding directly into the cost of travel. Airlines across Asia-Pacific have begun warning of higher fares as jet-fuel costs rise and routes are disrupted. Cathay Pacific has confirmed that fuel surcharges will increase. Beijing has also ordered an immediate halt to March exports of refined fuels, including gasoline, diesel and aviation fuel, in an effort to protect domestic supply.

The crisis is moving beyond the battlefield and into the arteries of the world economy. Diplomacy is hardening, emergency oil reserves are being tapped on an unprecedented scale, airlines are preparing passengers for higher costs, and China is tightening fuel availability just as global markets struggle to absorb the biggest oil disruption in history.

Private credit jitters deepen as Treasury buyback hits record size

The U.S. Treasury’s latest debt buyback and the turbulence in private credit hit markets at the same time this week, adding to a broader sense that financial conditions are becoming more fragile even as the government continues to manage liquidity aggressively.

The Treasury completed a $14.7 billion buyback operation, which market reports described as the largest in the history of the modern buyback program, while BlackRock’s HPS Corporate Lending Fund restricted investor withdrawals after redemption requests exceeded its quarterly cap. These are not the same story, but together they heightened concerns about how much strain is building beneath the surface of credit markets.

The BlackRock episode drew the most immediate attention. Investors in the $26 billion HPS Corporate Lending Fund sought to withdraw about $1.2 billion, or 9.3% of net asset value, in the first quarter. Because the fund limits quarterly repurchases to 5% of shares, BlackRock allowed roughly $620 million of redemptions and deferred the remainder. Barron’s reported that BlackRock shares fell 7.5% on the day, while other alternative-asset managers, including Blue Owl, KKR, and Ares, also dropped sharply, reflecting concern that stress in semi-liquid private-credit vehicles is no longer confined to a single manager.

What has unsettled investors further is not only the restriction on withdrawals, but also the questions now being asked about valuation. Bloomberg and Barron’s both reported that BlackRock recently marked a $25 million private loan down from par to zero in just three months, the second abrupt wipeout in consecutive quarters. Bloomberg also reported a similar earlier reversal on debt tied to Renovo Home Partners. The issue is not merely that losses happen. It is that in private credit, where loans do not trade openly every day, investors rely heavily on manager marks to judge value, making sudden collapses particularly unsettling.

That is helping revive an older concern about the structure of the market itself. The IMF said in 2024 that the global private-credit market had topped $2.1 trillion in assets and committed capital, while the OECD said assets under management stood at $1.8 trillion in June 2025. The sector grew in part because post-2008 regulatory tightening made some forms of lending less attractive for banks, leaving more room for non-bank lenders and private funds to step in. That shift has created a large pool of credit outside the traditional banking system, often backed by long-dated loans but offered to investors through vehicles that promise at least periodic liquidity.

The software sector has become one of the biggest fault lines in that model. Bloomberg reported last month that software accounted for roughly 40% of private credit, a concentration that matters because some investors and lenders now worry that the artificial intelligence bubble, if it pops, could weaken parts of the sector’s business model and repayment capacity. Other outlets have reported that concerns over software exposure have already contributed to markdowns, tighter financing terms, and broader pressure across alternative-asset managers. That does not mean AI will destroy software borrowers across the board. But it does mean one of private credit’s largest industry exposures is now facing greater scrutiny.

The Treasury buyback, by contrast, is better understood as a debt-management tool than as a bailout or emergency intervention. The Treasury has long said buybacks are meant to support market liquidity, smooth maturity peaks, and improve the functioning of the government bond market. Even so, the timing mattered. A record-sized operation arriving as private-credit funds restrict withdrawals and asset managers face questions about marks, leverage, and liquidity naturally encouraged a darker reading among traders already looking for signs of stress. That interpretation is partly inferential rather than confirmed policy intent, but it helps explain why the two stories resonated together.

The larger point is that private credit is now big enough, and deeply enough woven into the financial system, that problems within it can no longer be dismissed as niche. A run on the sector is not clearly under way. But repeated redemption caps, sudden markdowns, and growing unease over concentrated exposures are beginning to test the basic promise on which much of the industry rests: that investors can hold illiquid loans, collect attractive yields, and still regain access to their money with minimal friction. That bargain looks less comfortable than it did a year ago.

Birthplace of civilization

Hezbollah launches barrage as Israel warns Lebanon of wider costs

Hezbollah launched around 200 projectiles overnight, including rockets, missiles, and drones, at northern Israel, with some reaching as far south as Haifa in one of the group’s heavier recent barrages. The attack came alongside Iranian missile fire on Israel, suggesting at least some operational alignment between Tehran and its Lebanese ally, though the exact degree of coordination remains uncertain. Israeli officials had earlier warned Lebanon that civilian infrastructure could come under attack if the group entered the fight.

Israel responded with heavy overnight airstrikes on Beirut’s southern suburbs, the movement’s main stronghold in the capital. he Israeli military said it struck 10 sites in 30 minutes on Wednesday night, with 50 strikes recorded overnight, while broader Israeli operations have continued to hit Hezbollah-linked sites elsewhere in Lebanon. Lebanese authorities say the toll from the renewed fighting has risen rapidly, and displacement has increased as residents flee repeated evacuation orders and expanding strikes.

The exchange raises the risk of another serious escalation in Lebanon’s role in the war. Israeli officials have for weeks conveyed warnings, through intermediaries, that if Hezbollah drew Lebanon deeper into the conflict, Israel could attack state infrastructure as well as the group’s own military assets. Those warnings included civilian infrastructure such as Beirut’s international airport. That does not mean such attacks are certain, but it does suggest that Israel has sought to put the Lebanese state on notice that the price of failing to contain Hezbollah could rise sharply.

For Lebanon, the message is ominous. Hezbollah’s intervention ties the country more closely to Iran’s war with Israel at a moment when much of Lebanon is in no condition to absorb another full-scale national shock. If the current pattern holds, the conflict may move beyond tit-for-tat strikes toward a broader Israeli effort to pressure not only Hezbollah, but also the Lebanese state and the infrastructure on which daily life depends.

Iraq becomes a more active front in the war

U.S. and Israeli airstrikes are increasingly turning Iraq into one of the war’s most active secondary fronts, with repeated attacks in recent days hitting positions used by Iran-aligned factions within the Popular Mobilization Forces, or PMF. The pattern is becoming difficult to ignore. Most of the recent strikes have clustered along the Iraq-Syria frontier, especially around Al-Qaim in Anbar province, with additional incidents farther north in Nineveh and around Kirkuk. Iraqi and regional reporting has linked recent strikes to PMF positions, or former PMF sites, in Bartella near Mosul, in Dibis district near Kirkuk, and repeatedly along the Al-Qaim belt.

The factions reportedly hit include some of the most important groups in Iran’s Iraqi militia network: Kataib Hezbollah, Kataib Sayyid al-Shuhada, Kataib Imam Ali, and Asaib Ahl al-Haq. These organizations are not marginal actors. They sit within the broader PMF structure while maintaining deep ideological, operational, and, in some cases, logistical ties to Tehran. Analysts tracking the war have assessed that several recent strikes in Anbar, Kirkuk, and the border zone hit brigades or facilities associated with Iran-backed PMF formations, including units tied to Kataib Imam Ali and other Tehran-aligned groups.

Al-Qaim matters more than almost any other Iraqi location in this campaign. Sitting on the Syrian border, it forms one of the most strategically important links in the overland corridor connecting Iran to Syria and Lebanon. For years, that belt has been central to Tehran’s regional posture, allowing the movement of personnel, weapons, and materiel across a chain of allied territory and militia-controlled zones. Repeated strikes there suggest that Washington is not simply retaliating against isolated militia activity, but is trying to degrade the connective tissue of Iran’s regional logistics network at one of its narrowest and most vulnerable points.

The same logic may explain the spread of strikes into Nineveh. That governorate sits astride the broader northern approaches that matter for militia movement, storage, and reinforcement. Hitting sites there widens the pressure beyond a single frontier town and complicates the ability of Iran-aligned groups to reposition inside Iraq. Recent reports from Bartella and other areas in Nineveh suggest the campaign is no longer confined to the immediate border strip.

At the same time, the assumption that the United States was on an irreversible path out of Syria now looks less certain. In February, official U.S. statements and multiple media reports indicated that Washington was drawing down and vacating positions, including Al-Tanf, while broader plans pointed to a substantial withdrawal from Syria. But newer reporting says U.S. forces have reinforced Qasrak in northeastern Syria after those earlier withdrawal reports. That points to at least a tactical pause, or partial reversal, while the regional war expands.

What is emerging, therefore, is not just a series of punitive strikes on Iraqi militias. It increasingly resembles an effort to maintain a belt of military pressure running from eastern Syria into western Iraq, aimed at constraining Iran’s freedom of movement across the desert corridor that has long tied together Tehran’s allies in Iraq, Syria, and Lebanon. Whether that becomes a durable U.S. line of control remains uncertain. But the direction is plain: western Iraq is no longer merely adjacent to the war. It is becoming one of the key arenas in which the wider contest over Iran’s regional network is being fought.

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