Until now, the fighting had mostly involved Iran and Israel, which launched airstrikes on the Islamic republic last week. President Donald Trump’s decision to send bombers and cruise missiles into Iran dramatically escalates the conflict and moves the U.S. into offensive operations, not just a defensive posture to protect Israel and American troops in the region.

Foreign Minister Abbas Araghchi said on social media that Iran “reserves all options” in defending itself.

While Trump threatened more attacks unless Iran seeks peace, Karim Sadjadpour, a senior fellow at the Carnegie Endowment for International Peace and a top Iran expert, said it’s unlikely the country’s leadership will go that route. But its response could also prove to be catastrophic.

“Many of Iran’s retaliatory options are the strategic equivalent of a suicide bombing,” he said in a series of posts on X. “They can strike US embassies and bases, attack oil facilities in the Persian Gulf, mine the Strait of Hormuz, or rain missiles on Israel—but the regime may not survive the blowback.”

Energy markets are poised to suffer a major jolt as investors digest the implications of the U.S. bombing Iran, a top oil exporter.

Crude prices had already surged in the immediate aftermath of Israel’s airstrikes, and could soar even higher, depending on how Iran responds.

In a note last week, George Saravelos, head of FX research at Deutsche Bank, estimated that the worst-case scenario of a complete disruption to Iranian oil supplies and a closure of the Strait of Hormuz could send oil prices above $120 per barrel.

That’s because the Strait of Hormuz is a critical choke point in the global energy trade, as the equivalent of 21% of global petroleum liquids consumption, or about 21 million barrels per day, flows through the narrow waterway.

Iran’s ability to use proxies and allies in the region to retaliate on its behalf has also been severely weakened as earlier Israeli attacks have crippled Syria, Hezbollah, and Hamas.

Meanwhile, Sadjadpour noted that Iran’s Revolutionary Guards are a substantial force of 190,000 troops, but not monolithic.

“Do they continue to defer to the 86-year-old Khamenei as their commander in chief, though his regional and nuclear ambitions have now ended in colossal failure?” he asked.

Other analysts also warned of the potential for Iran to retaliate by taking Americans as hostages or launching cyberattacks. And Iran-allied Houthi rebels in Yemen said before Saturday that any U.S. attack on Iran would trigger attacks on U.S. vessels in the region.

But retired Army Gen. Wesley Clark, who previously served as the Supreme Allied Commander in Europe, told CNN that he doesn’t think Iran will resort to a maximum response like blocking the Strait of Hormuz.

Instead, it may launch some missiles at U.S. bases in the region or direct pro-Tehran militias in Iraq to attack U.S. forces.

“I don’t see a major response,” he predicted. “This Iranian regime calculates. It’s very careful to understand where it wants to go.”

There are about 50,000 U.S. troops in the region, mostly spread out across Kuwait, Qatar, Bahrain, the United Arab Emirates, Iraq and Saudi Arabia.

For now, it’s not clear yet that the U.S. attacks on Iran will prove to be decisive. Sadjadpour noted that Supreme Leader Ali Khamenei believes caving in to pressure projects weakness and invites more pressure.

But he also said Khamenei is not a “reckless gambler,” creating tension between his survival instincts and his defiant instincts.

“This is an unprecedented moment in Iranian history,” Sadjadpour added. “It could entrench the regime—or hasten its demise. It could prevent a nuclear Iran—or accelerate one. Military attacks/humiliations have both strengthened dictatorships (Iran 1980) and weakened them (Argentina, Milosevic).”

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The UK government’s promise of an extra £1bn to help disabled people into work is not matched by new money from the Treasury, casting doubt on ministers’ ability to deliver divisive welfare reforms while still tackling other priorities such as youth unemployment. 

Ministers have framed unpopular cuts to sickness and disability benefits as a “moral mission” to help people into fulfilling work rather than consigning them to a life on benefits. 

They say that by 2029-30, there will be £1bn of new funding per year to guarantee support for all benefits claimants with a health condition who want help to enter or return to work. 

But just £400mn of this will come on stream by 2028-29 — the last year covered by departmental budgets set out in the Spending Review earlier this month. Spending is then supposed to jump to reach the promised £1bn in the final year of the parliament.

“Our goal is to combine this new investment with existing capacity to establish a big, clear and simple offer of work, health and skills support to disabled people and people with a health condition,” the Department for Work and Pensions said in its impact assessment of the government’s welfare reforms, published last week. 

But DWP’s overall budget for the day-to-day running of the welfare system will rise just 0.4 per cent a year in real terms in the three years in which it aims to roll out this extra support — and will not grow at all on a per capita basis after factoring in growth in the UK population.

“The revolution in employment support . . . promised to sweeten sharp disability benefit cuts will now have to be funded out of essentially frozen day-to-day per person budgets,” analysts at the Resolution Foundation think-tank noted.

On Thursday, Vicky Foxcroft MP resigned as a Labour whip in protest against the government’s plans to cut disability benefits. She said tackling the rising welfare bill “could and should be done by supporting more disabled people into work” rather than cutting benefits.

More than 100 Labour MPs have expressed concerns about the reforms, although it is not clear how many will vote against the bill next month.

DWP has not yet set out what form its new job support will take. By the autumn, it hopes to persuade the Office for Budget Responsibility that the new support will lead to big gains in employment, yielding billions in welfare savings and wider benefits to society. 

OBR officials are sceptical about the potential for big pay-offs from back to work programmes and said in March they could not cost the proposals without more detail. 

“Past experience is that it is quite difficult to get really big results from employment support programmes,” Tom Josephs, a member of the OBR’s budget responsibility committee, told MPs earlier this year.

Meanwhile analysts say the commitment to extra support for those with health conditions will limit DWP’s ability to tackle other priorities — in particular its “Youth Guarantee” of help for 18 to 21-year-olds to access apprenticeships, training and job support. 

“I do think other things are going to get squeezed,” said Stephen Evans, chief executive at the Learning & Work Institute think-tank, adding that support for the long-term unemployed and funding for the Youth Guarantee could be at risk.

The DWP declined to say whether other services would be cut in order to meet the £1bn commitment. It said efficiency gains would allow it to “prioritise funding towards employment support”. 

The department currently spends £275mn a year on job support for the sick and disabled. A £1bn increase would consume a tenth of its overall day-to-day spending on service delivery and almost a third of its spending on employment support — which is set to rise to £3.5bn by 2028-29. 

DWP declined to say how much it spends on employment support at present, or whether support for other groups would be cut in order to meet the £1bn commitment. It said efficiency gains would allow it to “prioritise funding towards employment support” and that eight local pilots of the Youth Guarantee, funded with £45mn in their first year, would continue.

The DWP said it was “determined to create a welfare system that supports people into work and out of poverty”.

Yet the region’s most prominent internet platforms all climbed up this year’s rankings. Sea, No. 15, rose five places on this year’s Southeast Asia 500 after growing its revenue by almost 30% year-on-year to reach $16.8 billion. 

Singapore’s Grab also rose 24 places, reaching No. 128 on this year’s list, with revenue of $2.8 billion. And fellow ride-hailing platform GoTo, based in Indonesia, jumped 13 spots with sales of $1 billion.

All three platforms can cite one particular business for helping drive recent success: financial services. None of these companies started off as truly fintech companies. Sea focuses on gaming and e-commerce, while Grab and GoTo started off with ride-hailing and delivery. But financial services is proving to be a straightforward–and potentially lucrative–path for the region’s tech companies. 

Financial services is a small, but quickly growing, part of Sea’s business. Sea’s digital financial services arm, recently rebranded to Monee, grew by almost 35% last year, reaching $2.4 billion. Sea’s carried that momentum into 2025. Monee’s revenue posted year-on-year growth of 57.6% in the first quarter, reaching $787.1 million. 

As of March 31, 2025, consumer and loans principal outstanding stood at $5.8 billion, up 76.5% from the same period a year ago.

Monee launched an e-wallet in 2014, and since then has expanded to services like credit, banking, and insurtech. Most of Sea’s digital financial revenue and operating income is driven by its consumer and small and medium enterprise credit business. 

Sea also owns two digital banks: Maribank, which operates in Singapore, and Seabank which operates in Indonesia and the Philippines. 

Grab’s financial services was also the ride-hailing platform’s fastest growing business last year, with revenue rising by 44% to reach $253 million. Again, that momentum carried into 2025, with financial services revenue growing by 36% year-on-year in the first quarter. 

Like Sea, Grab first started its financial services business with an e-wallet. The company now offers loans to its drivers and merchants partners, and has also expanded into the digital banking space through GXS Bank and GX Bank in Singapore and Malaysia respectively. 

Grab’s total loans disbursed as of March 31, 2025 reached $566 million, a 56% increase from the same period the year before. 

GoTo has also set up its own financial services app, separate from its flagship ride-hailing service Gojek. GoPay, launched in 2023, uses less mobile data than having to use GoPay through the Gojek app, making it easier to access for those with less powerful phones. GoTo also holds a 22% stake in Bank Jago, an Indonesian digital bank. 

Revenue for Goto’s financial services unit almost doubled last year, reaching 3.7 trillion Indonesian rupiah ($230 million). 

Why invest in financial services?

Financial services is still a smaller business for Sea, Grab and GoTo when compared to their main services, but it’s a natural progression for these tech companies as they try to serve a population that’s still largely underbanked. Gross margins for financial services are also often higher compared to their main services offered like e-commerce or ride-hailing.

These customers normally present greater risks for traditional financial institutions. But tech platforms argue their data on users, gleaned from their e-commerce or on-demand services, can help build a risk profile that can be used to judge creditworthiness, thereby allowing them to disburse loans to a segment of population that traditional banks may not want to work with.

Digital banks offer another way to acquire more customers. Grab, Sea or GoTo can encourage users of their e-wallet services to open a new account with a digital bank. That, in turn, will give these companies more data, and eventually start offering other services like investment and insurance products.