Geopolitical risk dashboard

The Iran conflict is now a global event that has been transmitted through Iran's strategy of horizontal escalation to impose costs on the Gulf Arab states and its decision to activate its asymmetric control over the Strait of Hormuz, one of the world’s most critical energy chokepoints. A fragile ceasefire between the U.S. and Iran is holding while a broader deal to end the conflict takes shape. Neither side seeks a return to full-scale fighting, though negotiations are proceeding slowly and unevenly. Even if the two sides reach a framework agreement to end the conflict and reopen the Strait, it will take some time to return to the status quo ante. A comprehensive deal – including the nuclear program – will remain difficult to achieve, while the risk of reescalation looms. As of late May, traffic through the Strait remains severely impaired. We do not expect Iran to easily relinquish its control over this strategic chokepoint. Duration will be key for assessing and pricing impact to the global economy. The conflict will drive a political, economic and structural reset for the Gulf countries, including substantial capital expenditure needs – as we explore in our new Global Insights piece. In Lebanon, a fragile ceasefire with Israel endures, despite violations, as both sides pursue talks regarding the disarmament of Hezbollah. In Gaza, U.S.-led discussions about long-term governance, security and reconstruction have slowed since last year’s ceasefire. Re-escalation risk remains high.

The conflict in Iran has exposed the global economy’s dependence on energy flows transiting the Strait of Hormuz and ushered in the most significant energy crisis since the 1970s – already displacing more than 1 billion barrels of crude and one-fifth of global LNG supply, inflating energy prices globally and creating a shortage of refined products, specifically jet fuel. Interrupted flows have been partially offset by alternative pipeline infrastructure in the Middle East, exports from non-Gulf producers – particularly the U.S. – and existing energy diversification strategies in Europe and China. But continued uncertainty around how long disruptions might last – and how quickly supply can be restored – have driven ongoing market volatility and prompted policy interventions by national governments. In March IEA member states agreed their largest-ever coordinated release of emergency oil reserves in a bid to stabilize global oil markets, surpassing the 2022 withdrawal ordered after Russia’s full-scale invasion of Ukraine. Across Southeast Asia, leaders have announced a range of measure to address shortages and even proposed a regional oil-sharing framework. We expect the crisis, combined with ongoing fragmentation, to push countries to build more resilient economies focused on redundancy and diversification.

Mounting geopolitical competition is fueling a surge in cyber attacks that are growing in scope, scale and sophistication. Advances in generative and agentic AI now empower even unsophisticated threat actors, including criminals, to identify vulnerable targets, craft convincing scams and generate malicious code – at unprecedented speed and with increasing autonomy. Beyond phishing, AI is being used to generate adaptive malware, exploit identity credentials and probe AI systems themselves for weaknesses. Recent disclosures by leading AI developers that state‑linked actors have sought to replicate frontier models through illicit training on Western platforms underscore how AI systems themselves are becoming targets in geopolitical competition. State-backed hacking remains a significant and expanding risk, focused on political espionage, infecting critical infrastructure with malware and large-scale theft of intellectual property. Iran remains a capable state actor in this space. We are watching for accelerated Iranian cyber operations targeting the West in light of the U.S. and Israeli operation and expanded regional war.

Artificial Intelligence (AI) is increasingly a national security and political issue. It is at the center of U.S.-China strategic competition, with both countries believing it will deliver economic and military advantage to the country leading the AI race. In the U.S., Anthropic’s Mythos tool has brought safety and security issues to the fore. New advanced AI models pose an unprecedented threat to cybersecurity. This may be an inflection point for U.S. government efforts to regulate frontier systems, as focus increases on protecting its own systems, protecting the national interest and preventing model theft, especially from adversarial state-backed actors. Before the U.S. midterm elections, we see AI shifting to the center of U.S. political discourse as debates around datacenters construction, labor disruption, high energy prices and privacy concerns accelerate. We do not see meaningful discussions around AI between the U.S. and China in the short-term. Globally, tech sovereignty concerns will also likely intensify, prompting questions about over-relying on any single country’s technology stack and driving more demand for increased data integrity and control. Iranian attacks on Gulf data centers highlight the vulnerability of these assets and their role as critical infrastructure.

The threat of terrorism remains elevated as conflict in the Middle East has raised the risk of state-backed or lone-actor threats to Western interests. In May, the U.S. Justice Department unsealed an indictment against an Iranian proxy commander who organized 20+ retaliatory attacks in the U.S., Europe and Canada since late February. Iran is a cyber-enabled adversary as well as the world’s chief state sponsor of terrorism. In the cyber space, the development of powerful new tools like Anthropic’s Claude Mythos Preview have demonstrated unprecedented offensive and defensive cyber capabilities. AI companies are now working with the private and public sector to deploy these models to identify and patch vulnerabilities faster than they can be deployed by adversaries. AI-enabled cyber attacks have already grown in scope, scale and sophistication. State-backed hacking remains a significant risk, focused on political espionage, infecting critical infrastructure with malware and large-scale IP theft.

The Western Hemisphere has become a centerpiece of U.S. foreign policy under the second Trump administration. Since taking office, the administration has designated Latin American gangs and cartels as terrorist organizations; expanded counter-narcotics operations in the Caribbean; driven greater alignment with the U.S. on trade; and shown a willingness to act more directly in Venezuela’s political and energy sectors. More recently, it has tightened the economic and oil blockade on Cuba and rolled out sweeping new sanctions aimed at intensifying pressure on its regime. Several reinforcing dynamics are driving this shift, including the convergence of immigration and counternarcotics priorities with domestic politics; growing resource nationalism; and a broader turn towards free markets across the hemisphere. We expect the U.S. to keep deploying a wide range of economic, diplomatic, law enforcement and military levers to put pressure on adversarial regimes.

Recent court rulings have hampered parts of the Trump administration’s tariff agenda. In February, the U.S. Supreme Court invalidated tariffs imposed under emergency powers, prompting a tariff refund process. We expect this process to unfold slowly and unevenly, contributing to more uncertainty for businesses and markets. In May, the Court of International Trade ruled that the time-bound, across-the-board 10% tariffs imposed under Section 122 authority are unlawful – a decision that has since been stayed pending appeal. Despite these setbacks, we see the administration relying on ongoing Section 232 and Section 301 investigations to impose additional, more durable tariffs. Disputes over previously agreed trade deals – like recent U.S. threats to raise EU auto tariffs – underscore our view that rolling negotiations, agreements and disputes represent the new normal in U.S. trade policy. Global trade flows are rewiring, not reversing. Even with growing protectionism, global trade exceeded a record $35 trillion last year. We are closely watching the scheduled review of the trilateral USMCA trade agreement that begins in July and think a more bilateral-focused set of arrangements is likely to emerge between the U.S., Mexico and Canada.

U.S.-China competition remains the structural backdrop to global geopolitics. From a U.S. perspective, China is the axis around which virtually every major geopolitical issue rotates – from defense to trade, technology, energy, security and beyond. Presidents Trump and Xi met in Beijing on May 14-15 in a highly anticipated summit that produced a limited set of commercial deals but no major breakthroughs. Both sides signaled a desire to preserve relationship stability while managing trade frictions and strategic chokepoints. The mechanism will be a series of other leader-level engagements this year, including a potential reciprocal visit by President Xi to the U.S. in September. The commercially based détente with China that President Trump is determined to maintain is holding, for now – but it is narrow, fragile and subject to disruption across a range of issues, particularly defense and security. In the military sphere, the U.S. remains committed to countering China in the Indo-Pacific. Taiwan is a particular focus for Beijing and a potential flashpoint. China continues to wield its full suite of military, economic and diplomatic tools to pressure the island. In April, President Xi met with the leader of Taiwan’s opposition KMT party for the first time in roughly a decade at the same time it conducted live-fire drills and naval deployments in the Taiwan Strait.

Amidst stalled U.S.-Ukraine-Russia diplomatic talks, Ukraine and Russia remain locked in a war of attrition. Ukraine has expanded the reach of its long-range strikes in recent months, hitting Russian energy export infrastructure and other sites as far as the Ural Mountains. These attacks have caused Russian energy companies to sharply cut oil production by the highest monthly levels in years. At the same time, Russian territorial gains have slowed after an unsuccessful spring offensive: in April, Russia suffered a net loss of territory for the first time since August 2024. Russia also scaled back its annual May Day Victory Parade to the smallest form in almost two decades and restricted mobile internet access in Moscow amid fears of Ukrainian drone attacks. Exhaustion is setting in, with Russia having been at war against Ukraine longer than the Soviet Union was at war against Nazi Germany. These dynamics could put pressure on Russia’s negotiation posture and increase the likelihood of reaching a ceasefire. Even still, a durable settlement will prove challenging to reach.

U.S.-Europe relations have undergone a complete reset since the start of the second Trump administration and are now under historic strain. In May, President Trump announced the U.S. would be pulling 5,000 U.S. troops out of Germany over the next 6-12 months and warned of additional withdrawals to come. He also threatened the EU with higher tariffs unless the EU formally approved and implemented the July 2025 U.S.-EU trade deal, which Brussels did in May. Recurring security and economic flashpoints are likely to accelerate ongoing trends towards diversification away from the U.S., seen in a slate of new free trade agreements, sweeping defense spending, fiscal reforms and diplomatic outreach to Beijing. Despite this, we still think Europe fully substituting its economic and security relationship with the U.S. is unlikely – in part because hedging towards China risks exposing domestic industries to Chinese industrial overcapacity and inviting a U.S. response. Politically, the UK is facing renewed instability that could see Prime Minister Keir Starmer forced out this year. In Hungary, Péter Magyar’s landslide victory over Prime Minister Victor Orbán is a blow to European far-right populist parties that could help mend EU-Hungary relations and unlock previously blocked EU funding for Hungary and Ukraine.

North Korea has taken a series of escalatory actions that heighten risks in and beyond the Indo-Pacific: deploying troops and munitions to support Russia’s war in Ukraine, accepting military technology assistance from Moscow and accelerating its nuclear weapons program. In April, North Korea carried out four missile tests – the highest monthly total in more than two years. Its nuclear arsenal is now estimated at roughly 50 warheads, which – combined with a growing stockpile of ICBMs – have the potential to reach and possibly overwhelm U.S. ground-based missile defenses. In May, North Korea revised its constitution to formally place its nuclear arsenal under the authority of Leader Kim Jong-un and remove unification of the Korean peninsula as a stated national goal – a move seen as locking in Seoul as a permanent adversary. President Trump has stated a desire to reengage Kim Jong-un through personal diplomacy, as he did in his first administration: in Feburary the White House clarified he remains open to dialogue “without any preconditions.” Compared with Trump’s first term, however, Pyongyang appears emboldened by its stronger ties with Moscow and Beijing, as well as its own military advances. It may therefore be less inclined to pursue better relations with the U.S.