There are scores of recent developments in the Middle East each of which could threaten the peace and prosperity of the Gulf region. On June 16, Israel inaugurated a new settlement named after US President Donald Trump. This is believed to be a gesture to thank President Trump’s unflinching support for Israel and recognition of the latter’s sovereignty over occupied Arab territories including Golan Heights. Golan Heights were captured from Syria in the 1967 war. In 1981, Israel announced the annexation of the territory. The US has long supported the so-called two-state solution, which mandates Israel to withdraw its forces from the lands occupied in 1967. This reverse on the foreign policy commitments of the US, is going to cause more chaos in an already fragile region. The move is destined to undermine US credibility among Arabs. It is going to lose its status as an impartial mediator. Experts believe that the Israeli move will attract more Israelis to Golan Heights for permanent settlement. Out of the 50,000 people living in the Golan Heights around 22,000 are Jewish Israelis. The UN has always rejected Israeli settlements in the occupied territories. Equally grim has been the ongoing surge in attacks on ships in the Persian Gulf. It too has far-reaching consequences. On June 13, after a number of attacks on two tankers in the Gulf of Oman were recorded, the ship insurers increased the insurance costs for ships sailing in the Persian Gulf by around 10 per cent. Experts fear that if more attacks occur in the coming days, the insurance cost would rise further. This would have disturbing repercussions as the cost of everyday commodities would soar. The soaring oil prices trend speaks of fears of a global economic crisis In addition, there are concerns that oil supply would shrink. Oil prices have already been on the increase by as much as 4.5 per cent. A number of tanker companies have decided to stop sending new bookings to the Gulf as tensions mount. If the trend continues, there would be a global economic crisis. Freight rates for super tankers, transporting oil from the Persian Gulf to Asia, touched a two-month high of nearly $13,000 on June 13, the day there were attacks in the Gulf of Oman, around $2,000 higher than a day before: on June 12. The US move to boost its military presence in the Gulf has heightened fears of an escalation. Iran, already desperate over a crippling economy and facing diplomatic isolation, might take certain steps in the Persian Gulf; wreaking great havoc on the stability of the region with unwelcome implications for the entire world. The relations between Iran and the US reached a very low ebb when, in 2018, after Trump unilaterally withdrew US from the Joint Comprehensive Plan of Action, a nuclear deal signed in 2015 between Iran and other world powers to ease economic sanctions on Iran. In return, restrictions were imposed on its nuclear programme. Rumours about Iran’s withdrawal from the Non-Proliferation Treaty, an international treaty curbing the proliferation of nuclear weapons, are also in the air. Iran has been maintaining its nuclear programme is for peaceful purposes; presenting the signing of the JCPOA and the NPT as testimony to its sincerity. Israel, a close ally of the US, has never signed the NPT. It has been pursuing a perilous opaque policy regarding nuclear weapons. The opaque policy, where a state neither admits nor denies the possession of nuclear weapons, has allowed Israel to proliferate with impunity. This belligerent nuclear policy adopted by Israel has, time after time, acted as a barrier in creating a Nuclear Weapon Free Zone in the region. The US policy of tightening the noose around Iran’s economy by withdrawing from the JCPOA; a planned strategy to isolate Iran diplomatically and rise in the nuclear arsenal of Israel are some of the factors that might be cited by Iran to withdraw from the NPT. Article X.1 of the NPT provides that state parties have a free hand to withdraw from the Treaty if they believe that their national interests are being jeopardized. Giving Iran a free hand would mean inviting an unthinkable new Tanker War, the one fought between Iran and Iraq in the Gulf in the 1980s. During their protracted conflict from 1980-1988, both Iran and Iraq attacked one another’s vessels in the Persian Gulf, including some in the Strait of Hormuz. The economic warfare against Iran and the presence of the US military in the region are factors impelling Iran to walk a tightrope. The US should understand that deterrence has failed. Its strict warnings and deployments of weapons systems have proved insufficient to deter Iran. There are more risks involved than there are possibilities of gain for the US in this venture. The most severe blow to the US standing in the region is its loss of credibility, long enjoyed in the days gone by. On one hand, the US claims a desire for a long-lasting peace in the Middle East. On the other, it has been sending ammunition and forces to the region. The Trump administration is concurrently caught up in tensions with Iran and China; North Korea and Afghanistan; Russia and Venezuela. A number of other regions in the world are watching. This might turn the attention of the US policymakers away from the crisis in the Middle East, which, if not sorted out in timely, could prove a global catastrophe. The writer is a research officer at the Islamabad Policy Institute