Three separate but interconnected military crises intensified over the past 72 hours. Iran launched its widest coordinated strike since February, targeting U.S. military installations across Qatar, Kuwait, Bahrain, Jordan, the UAE, and Oman while declaring the Strait of Hormuz closed. China tested a submarine-launched ballistic missile that flew over the Philippine island of Luzon. And NATO’s Ankara summit wrapped with a commitment to spend 5% of GDP on defense — but no clear mechanism for enforcement and no resolution to the fault lines between Washington and European capitals over Ukraine.

These are not isolated events. Each tests a different aspect of U.S. deterrence. Together, they reveal the structural vulnerabilities of a foreign policy attempting to manage three simultaneous pressure campaigns with diminished diplomatic bandwidth.

The Hormuz situation is the most immediately consequential. Roughly 20% of global oil trade transits the strait. Iran has now blocked it effectively since late February 2026, when the United States and Israel launched air strikes against Iranian nuclear and military infrastructure. What changed over the weekend was scale. On Saturday night, the Islamic Revolutionary Guard Corps Navy fired on a commercial vessel transiting the strait and formally declared the waterway closed. By Sunday morning, Iran had fired ballistic missiles and armed drones at U.S. bases in at least four Gulf states. The Trump administration responded with a third round of strikes against Iranian military sites. As of this writing, the cease-fire that nominally ended the February conflict has effectively unraveled.

What We Know

Iran-Gulf escalation: Between approximately 02:00 and 03:30 UTC on July 12, IRGC forces fired ballistic missiles and drones at U.S. installations in Qatar, Kuwait, Bahrain, and Jordan. Separate strikes hit Manama (Bahrain), Kuwait International Airport, Abu Dhabi, Riyadh, Saudi Arabia’s Eastern Province, and Erbil International Airport in Iraq’s Kurdistan Region, according to Al Jazeera and Euronews. Iran additionally targeted Israeli cities. The Trump administration confirmed U.S. retaliatory strikes and described the cease-fire as no longer operative.

Hormuz closure: The strait has been functionally disrupted since the February U.S.-Israel strikes, per Wikipedia’s Strait of Hormuz crisis article. The IRGC previously boarded and attacked commercial ships; the July 11 strike was described by the Trump administration as the trigger for the latest round of U.S. retaliation. The International Crisis Group’s tracker confirms Iran used drones against at least four commercial ships transiting the waterway in the preceding two weeks.

PLA nuclear signaling: On July 6, a People’s Liberation Army nuclear submarine conducted a test of a submarine-launched ballistic missile. U.S. Naval Institute News reported the missile launched from the South China Sea and flew over the northern coastline of Luzon before landing in the Pacific between Nauru and Tonga. The Institute for the Study of War confirmed the test on July 10, calling it a demonstration of enhanced second-strike capability. PRC state media covered the test — an unusual public acknowledgment suggesting deliberate signaling.

NATO Ankara summit: NATO allies concluded a summit in Ankara on July 8, pledging to raise defense spending to 5% of GDP — 3.5% in direct military spending and 1.5% on dual-use infrastructure. European allies and Canada increased core defense investment by more than $139 billion in 2025, per the Ankara Summit Declaration. Spain pushed back against the 5% target; Czech Republic 2026 spending may fall below 2% of GDP, per the International Centre for Defence and Security. The Trump administration agreed to license Ukraine to manufacture Patriot air defense systems domestically.

Ukraine-Russia front: Russia bombarded Kyiv with dozens of missiles and hundreds of drones on July 7, killing at least 11 civilians, according to Ukrainian President Volodymyr Zelenskyy. Putin accused European nations of prolonging the conflict. The Institute for the Study of War reported Russia’s net territorial gain between January and July 2026 amounted to only 97 square kilometers — a figure that suggests Moscow’s offensive has stalled despite continued attrition.

China-Taiwan squeeze: The Australian Strategic Policy Institute published an analysis on July 7 noting that China is “taking advantage of its temporary trade truce with the United States to squeeze Taiwan harder and in more ways.” Senator Tammy Duckworth traveled to Taipei the same week to reaffirm security commitments she said were being undermined by delays in arms deliveries and policy uncertainty.

What’s Driving It

Iran’s calculus is coercive attrition. Tehran cannot win a direct conventional war against the United States. Its strategy is to raise the cost of the conflict for Washington’s regional partners — threatening Gulf monarchies into political neutrality — while using Hormuz as an economic lever. Basing American carriers in the Persian Gulf and keeping the strait open requires active combat operations. Iran is betting the Trump administration will eventually decide that cost exceeds the strategic benefit of regime pressure.

China is using the U.S. distraction in the Middle East deliberately. The SLBM test over Luzon was not routine. It was conducted in the South China Sea, a contested waterway, and the missile flew directly over Philippine territory. The U.S. deployed additional military assets in the Luzon Strait in 2026, per Wikipedia’s timeline, suggesting the PLA was demonstrating its ability to operate through that presence. The trade truce with the United States — which reduced tariffs from peak levels negotiated in early 2025 — has given Beijing economic breathing room to sustain military modernization while avoiding the kind of bilateral confrontation that might accelerate it.

Russia is recalibrating after battlefield failure. Its near-zero net gains in Ukraine this year reflect a degraded ground force, but the bombardment strategy against civilian infrastructure continues. Putin’s public warnings to European governments, delivered around the Ankara summit, reflect concern that NATO is institutionalizing support for Ukraine in ways Russia cannot offset diplomatically. Allowing Ukraine to manufacture Patriot systems domestically is a qualitative shift — it removes a key dependency that Russia could previously pressure through arms delivery timelines.

U.S. alliance management is under structural strain. The Ankara summit surfaced a durable tension: European NATO members, particularly Finland and the Baltics, do not trust that Article 5 commitments are unconditional under the current administration. Spain’s resistance to the 5% target and Czech Republic’s likely miss below 2% are not anomalies — they reflect the political limits of what democratic governments can sustain in military spending without clear threat proximity. Meanwhile, Washington is conducting simultaneous military operations against Iran, managing a Taiwan signaling environment, backing Ukraine, and pressing allies to spend more. That is not a sustainable bandwidth budget.

Implications

For U.S. national security: The Hormuz closure is the most acute near-term risk. An extended standoff will strain U.S. naval logistics, tie down carrier strike groups, and invite opportunistic probing elsewhere — including from China in the South China Sea. The IRGC’s strikes on U.S. installations in six countries, even if they caused limited casualties, erode deterrence credibility if they do not generate a proportionate response. The administration’s decision to describe the cease-fire as defunct raises the question of what the endgame looks like and whether it has been defined.

For businesses: Hormuz handles approximately 20–21 million barrels of oil per day in normal conditions, along with significant liquefied natural gas volumes. A prolonged closure would accelerate oil price increases already underway, with downstream effects on transportation, manufacturing, and any industry with energy-intensive operations. Supply chain planners routing LNG through alternative paths face higher costs and longer transit times. The IEA July 2026 Oil Market Report and EIA Short-Term Energy Outlook both project upward price pressure if the disruption extends past 30 days.

For allies: Gulf monarchies are in an impossible position. The U.S. needs their basing infrastructure; Iran can strike it. Saudi Arabia, the UAE, and Qatar are simultaneously hosting U.S. forces and absorbing Iranian missile attacks. Their capacity to absorb those attacks without demanding either a ceasefire or U.S. escalation to Iranian regime decapitation is limited. European allies, watching the Middle East consume U.S. strategic attention, have legitimate questions about whether American commitments in Europe can be sustained concurrently.

What to Watch

Hormuz diplomatic track: Any back-channel contact between Washington and Tehran through Oman or Qatar would signal a move toward de-escalation. The absence of such signals by end of week should be interpreted as Iran having accepted a renewed open conflict.

PLA activity near Taiwan and Luzon: A follow-on naval exercise in the South China Sea or additional SLBM tests would suggest the July 6 launch was the first of a signaling sequence rather than a standalone demonstration. ISW’s July 10 update flagged this as a risk indicator.

NATO spending compliance: By the end of July, updated national defense budget projections from Spain and Czech Republic will test whether the Ankara pledge has domestic political support or is primarily declaratory.

Ukraine’s Patriot production timeline: The U.S. licensing of domestic Patriot manufacturing is strategically significant but practically limited by industrial capacity. Watch for how quickly Ukrainian defense industry can operationalize the arrangement — and whether Russia’s bombardment specifically targets that production capacity.

China-U.S. Section 301 negotiations: Beijing added 10 U.S. entities with military ties to its export control list this week in response to new U.S. probes of Chinese companies. That is a calibrated escalation short of trade war resumption. If additional entities are added, or if China restricts rare earth exports, the trade truce is effectively over.

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