Iran’s Secret Weapon Is in Iraq

This is less a headline about isolated militia activity than an argument for a higher persistent regional security premium. The market usually prices these episodes as short-lived “geo shocks,” but the more important second-order effect is that repeated, low-cost harassment raises the expected operating cost for every energy, logistics, and industrial asset in the Gulf even without a formal state-to-state escalation. That means the impact is likely to show up first in insurance, rerouting, security spend, and capex delay, then later in a wider risk discount on Gulf-linked EM assets.

The biggest near-term loser is any business model dependent on frictionless Gulf throughput: refiners, shipping, port services, and contractors with meaningful exposure to Iraq/Kurdistan and the wider GCC. The asymmetry is that the attackers do not need to hit export terminals to matter; a sustained campaign against consulates, bases, and civilian infrastructure is enough to force higher force-protection spending and create decision latency for foreign capital. That is particularly damaging to frontier and quasi-sovereign projects where a small increase in perceived sovereign risk can defer financing or widen spreads materially.

The catalyst path is measured in weeks to months, not days: if attacks remain frequent and Baghdad stays unable or unwilling to suppress the militias, expect a gradual repricing in Gulf risk assets rather than a single selloff. The main reversal would be either a visible Iraqi crackdown or a broader de-escalation in the Iran channel; absent that, the risk premium can persist and even compound as insurers and operators re-underwrite the region. The contrarian point is that the immediate headline may overstate direct disruption to global oil supply, but understate the cumulative impact on investment allocation and project timelines across the Gulf.