Written by: R Swaminathan6 min readMar 23, 2026 03:36 PM IST First published on: Mar 23, 2026 at 03:36 PM ISTThe Third Gulf War has entered a perilous phase, marked by a widening of targets and increasing risks, and has now evolved into a conflict that threatens the foundations of regional stability and global energy security. The stakes are high for India, and as Prime Minister Modi said in his address to Parliament on Monday, dialogue and diplomacy are the only way forward, and the country should remain prepared and united.The latest escalation in the war began with Israel’s attack on Iran’s South Pars gas field, a critical asset that supplies most of Iran’s domestic gas. Tehran’s response was immediate and consequential. Within hours, it launched a missile strike on Ras Laffan in Qatar, the world’s largest LNG production hub, with long-term adverse effects on energy markets.AdvertisementThe escalation deepened further last Saturday. Following an Israeli strike earlier that day on Iran’s enrichment facility in Natanz, Iran carried out one of its most significant retaliatory attacks on Israel. Two missiles penetrated Israel’s Iron Dome air defence system and struck areas near Dimona, which hosts its most sensitive nuclear facility producing plutonium. The strikes caused extensive damage in surrounding areas and injured more than a hundred people.This sequence of events marks a qualitative shift. The conflict is no longer confined to military or nuclear targets; it has expanded to include energy infrastructure and strategic sites. US President Donald Trump issued a 48-hour ultimatum to Iran on Saturday, demanding the reopening of the Strait of Hormuz and threatening strikes on Iran’s power infrastructure. Iran’s response was unequivocal. It rejected the demand and warned that any such attack would trigger retaliation against US-linked financial institutions and critical infrastructure across the Gulf, including energy, IT, and desalination facilities.Trump’s approach appears to reflect an “escalate to de-escalate” strategy, one that seeks to compel compliance through the threat of overwhelming force. But such a strategy carries immense risks. The immediate burden of escalation is likely to fall not on the US, but on its Gulf partners. Critical infrastructure across the region could become targets, with cascading economic and humanitarian consequences.AdvertisementWhat was intended as a swift and decisive intervention is increasingly resembling a protracted conflict. Iran’s strategy appears to be one of endurance. Unable to match the military capabilities of the US and Israel, it is seeking instead to absorb pressure while imposing costs, particularly on US allies in the region. In this framework, survival itself becomes a strategic success. The international response to Trump’s call for support underscores this challenge. Appeals to NATO allies, as well as to Japan, South Korea and even China, to provide naval escorts for commercial shipping through Hormuz have largely been met with hesitation. Many fear entanglements in a conflict where the United States may not remain committed, leaving them exposed to retaliation.Domestic pressures in the United States further complicate the situation. Rising gasoline prices and inflation are beginning to affect American consumers, with the mid-term elections approaching. Trump, who has emphasised his success in lowering fuel prices, now faces a dilemma. Ending the conflict quickly, preferably with a declaration of victory, may be politically necessary. But Iran shows little inclination to concede. Tehran is seeking to reshape perceptions in the Gulf by arguing that US military bases, far from guaranteeing security, have become liabilities. By hosting these bases, Gulf states risk being drawn directly into a conflict that is not of their making.Should the United States follow through on its ultimatum and strike Iran’s power infrastructure, the consequences could be severe. Even with advanced interception systems, the scale of disruption caused by Iran’s retaliation in the Gulf could be significant. At the same time, Iran appears to be playing a longer game. It retains substantial drone capabilities and continues to influence maritime traffic through the Strait of Hormuz. Sustained disruption would likely drive up oil prices, with broader economic repercussions. Over time, this could erode political support in the US, which is already tenuous.Iran is not interested in a quick ceasefire, unlike during the 12-day war last June. It seeks a more durable reconfiguration of regional security, including an end to recurring cycles of conflict and a new framework for maritime transit in Hormuz, negotiated among regional states. Such an outcome would have far-reaching implications, including a potential reduction in US military presence in the Gulf. In this context, Trump’s ultimatum is unlikely to alter Iran’s strategic calculus. If anything, it risks accelerating escalation. The ripple effects would extend beyond oil to commodities such as urea, aluminium, helium and sulphur, affecting a wide range of industries.you may likeThe United States has already begun repositioning military assets, including naval forces and Marines, reportedly in preparation for potential operations targeting Kharg Island, a key hub for Iran’s oil exports. Such a move would mark a significant escalation and could entail considerable casualties. Any ground engagement would likely deepen domestic pressures to disengage. The hope remains that the ultimatum will not be executed in full and may instead be extended, creating space for de-escalation. Yet the available options are limited, and each carries its own risks.For the first time in this conflict, the US appears to be in a strategic bind. Escalation risks uncontrollable consequences; restraint risks a loss of credibility. Navigating this dilemma will require not only resolve, but also a measure of restraint that has so far been in short supply.The writer is former Governor of India to the International Atomic Energy Agency (IAEA), Vienna, former ambassador to Egypt and former Permanent representative to Arab League