National security experts and financial market traders seem to disagree on what will follow the recent escalation of tensions between Iran and Israel. The question of who turns out to be correct will have significant consequences not only for an already unstable Middle East but also for the wellbeing of the global economy and the stability of its financial system.

The notion of a “new Middle East” has often come up in the national security camp’s characterisation of what has transpired following Israel’s attack on the Iranian consulate in Syria at the start of this month.

Specifically, multiple lines have been crossed by both parties. For the first time in history, the two countries have attacked each other directly rather than through the use of proxies and targets in third countries. Iran has directed a once-unthinkably large number of missiles and drones at Israel, responding to the Israeli attack in Damascus that killed a number of Iranian senior officials. Friday’s Israeli retaliation came on the heels of an explicit warning from Iran’s foreign minister that it would immediately respond should it be attacked directly.