Three years after the attack on Oct. 7, Israel is commemorating the dead and facing a hard truth: the conflict which was initially fought on the Gaza border has become far bigger. Gaza is unsettled, Iran has transitioned from proxy war to open conflict, Yemen is once again a major theatre of struggle, the Strait of Hormuz is once again a thorn in the side for global energy markets, and the price of geopolitical risk has returned to the price of just about anything.

These constitute the reason that Israel's security doctrine has undergone such a dramatic shift. The Israeli military stated on Wednesday that it has tracked over 31,500 rockets, missiles and drones fired at Israeli targets over the past year since October 2023, from various lines of fire. Approximately 20,000 arrived from Lebanon, 10,200 from Gaza, some 1,200 from Iran and several dozen from Yemen and Syria as well. Israel claims it has destroyed some 100,000 targets in that same timeframe.

The human price is much greater than the loss of life on the battlefield. Since the beginning of the war, over 30,000 wounded soldiers and security personnel have passed through Israel's rehabilitation system, the Defence Ministry says. Approximately 63 per cent are getting treatment for psychological disorders such as post-traumatic stress disorder, anxiety and depression. The reserve army has grown by approximately 36 per cent and this year an average of 80-100 days will be expected for combat reservists.

These figures account for much that is overlooked in the outside world in Israel. October 7 was not only the day of another military campaign. It swept away an assumption that would have been that a sophisticated intelligence and border technology and deterrence would give enough warning before a major attack.

Thus, Israel's emerging doctrine is to halt hostile capabilities from growing to fruition, not simply because they were in the midst of launching, but because they might be in the process of maturing before they are ready to launch. This translates to increased security margins, increased ability to penetrate intelligence systems, longer range penetrations and much more leeway for military infrastructure operated by enemy groups near Israel.

This doctrine has its own dangers though. Pre-emption can prevent adversaries; pre-emption can also establish a near permanent state of confrontation.

One such conundrum is Iran.

Israeli security officials have issued a warning that there may be Iranian or Iran-backed threats to Israeli or Jewish targets over the coming week, coinciding with the October 7th anniversary. These alerts are not to be taken as an indication that a particular attack is about to happen. But they show what a difference the clash has made. Israel no longer sees Iran as just a backer behind the armed groups of Hezbollah, Hamas and others. Tehran as a city is now on the warpath.

Meanwhile, Iran is putting pressure on the weak points of the global economy: energy, maritime transport.

Iran is preparing to close down “illegal” transit routes through the Strait of Hormuz soon, said an adviser to Iran's Revolutionary Guards on Wednesday. It remains to be seen whether that warning means a massive impact. The key thing is that traders, shipowners and insurers can no longer afford to turn a blind eye to it.

Prior to this current war, about one-fifth of all oil supplies around the world went through Hormuz. In September, and despite efforts by producers to find alternative routes and other unconventional shipping arrangements, Gulf oil flows excluding Iran have only reached about 81 per cent of pre-war levels.

The other pressure point on this side of the Arabian peninsula is Bab el-Mandeb.

In an escalation of the conflict between the group and the Saudi-backed Yemeni government, the Houthis launched missiles and drones containing explosives on Wednesday at Aden International Airport. Bab el-Mandeb is the strait that links the Indian Ocean and the Red Sea and thence to the Suez Canal. It is, therefore, the second large artery of international trade which is at risk there.

Here, the Middle East security crisis turns into a worldwide business drama.

Brent crude futures were priced at more than $101 per barrel on Wednesday. The U.S. Energy Information Administration is now forecasting average Brent prices of around $105 for the fourth quarter, up from the previous forecast of $95.The EIA has raised its forecast for the fourth quarter's average price of Brent oil to around $105, up from the previous forecast of $95. The price of oil has increased by over 37 per cent since the last Iran war started in February.

The refinement of fuels is making an increasing problem. The price of diesel in Europe was trading at a staggering $77 premium to Brent on Wednesday. The International Energy Agency (IEA) has therefore been talking about a new shipment of emergency oil and diesel supplies.

The effects cascade through economies: high-dollar diesel driving up trucking and agriculture costs; high-dollar jet fuel squeezing airline profits; high cost of shipping insurance driving up landed costs; high oil prices driving up inflation; high inflation holding interest rates higher; high interest rates impacting mortgage and corporate borrowing and investment.

This type of transmission is nearly perfect in India.

India imports over 4/5 of its crude oil requirement. So, higher energy prices have come at just the wrong time. The RBI had announced a 25 basis points hike in its repo rate to 5.5 per cent on October 7, which was the first time in nearly four years, and declared a change in monetary policy stance from “calibrated easing” to “calibrated tightening”. Despite a hike in growth estimate to 7.1 per cent for FY27, the RBI has also pushed up its inflation forecast to 5.2 per cent.

The rupee has been trading around 96.4 to the dollar. India's crude-import bill had risen significantly so far this financial year. Oil above $100 per barrel will impact airlines, logistics, chemicals, paints, consumer goods and ultimately household purchasing power. What happens in Hormuz and Bab el-Mandeb is no longer a distant geopolitics for India but can impact inflation, interest rates, corporate margins and a typical Indian household's monthly EMI.

The Middle East is no longer one of a series of distinct wars. The more the interactions between the developments in Gaza, Lebanon, Iran, Yemen, the shipping lanes of the Gulf and the American military posture increase. A missile fired from Yemen can affect the way shipping deals with the Red Sea. A threat in Hormuz can push the Brent above $100. High crude prices can strain the Asian currencies and push central banks thousands of kilometres away to re-think interest rates.