Iran, not the US, currently has the strategic upper hand

If there ever was a strategy behind Donald Trump's decision to blow up the Middle East — and increasingly few believe there ever was — it is lying in tatters as the second week of the Iran war draws to a close.

It is Iran — not the US — setting the terms of a battle, which is now not a battle over military might but of economics and messing with people's heads.

The tide has turned is the message of most analysts this week.

And Iran has the advantage.

Iran chalks up key victories

This week, it was Iran that was in control of the world oil market, not the United States, contrary to Trump's apparent plan to seize control of Venezuelan and Iranian oil in a bid to gain a competitive advantage over China.

This week, it was Iran that was able to shake the foundations of economies across the region that depend on oil and gas, but which are now having to close down production while fighting off drone and missile attacks on their production facilities.

And of course this week Iran chose a hard-line leader in defiance of Trump's airy assertion that he wanted a say in who would run Iran.

This week, Iran struck further blows to the sense of stability and confidence on which Gulf states have built successful economies.

Having undermined travellers' confidence in flying via the Gulf, and creating a huge no-fly zone over some of the world's busiest flight paths, Iran turned its attention to shaking confidence in places like Dubai — as stable bases for the finance and tech sectors — simply by a threat.

The Islamic Revolutionary Guard Corp said an attack on an Iranian bank gave Iran free rein to target US financial interests across the region, notably banks and IT companies. This sparked a mass evacuation from Dubai's financial and high-tech districts.

That sense of menace was reinforced in Dubai on Friday morning by what was without doubt the biggest strike in the centre of the city to date: an explosion close to the international financial district that sent a massive plume of smoke across much of the city skyline.

(Locally, it was reported with Emirati understatement that "debris from a successful interception caused minor damage to the facade of a building in the city centre".)

But there were signs of flight booking sites suddenly being flooded and ticket prices jumping by the minute.

Keep an eye on March 31

Gulf states are talking of this being a passing shadow over their futures but they now face an existential threat to their whole business model: not just the loss of oil and gas revenues, but a challenge to their moves to diversify away from those revenues by becoming transport hubs and financial centres.

In the Gulf, as in much of the rest of the world, there is a presumption that the US president will now be looking for a way out of the war he helped start, claiming victory even as he has caused chaos in the region, and to the global economy.

If you are looking for a date that may be helping focus Trump's mind, it is March 31.

The US president is scheduled to fly to meet with China's leader Xi Jinping on March 31 and it seems highly unlikely that he will want to head there without some story of great military success and global dominance to tell.

But that suggests Trump still holds levers to influence events, as opposed to just blindly asserting that something has happened.

So much of the international coverage of this war has been driven by a presumption that the US president has the power to direct events, particularly a US president who has shown no regard for guardrails which constrain his power at home.

Yet, even with all that power he has been wielding at home and abroad, and the massive bombardment the US and Israel have inflicted on Iran, the US is not in control of what is happening.

Energy market beyond Trump's control

The commentary and analysis is shifting to reflect that, not only are Trump and the US not in control of what is happening, but they now have little chance of getting it back under control, particularly when it comes to the energy market.

Energy market analysts will tell you that you can't just restart the flow of oil, either out of the ground or around the globe.

It will take months at best.

And Iran shows no interest in giving up the massive lever it has now been handed over the oil market. It can export its own oil. Sanctions on oils sold by its ally Russia have been lifted by the US.

Wars are often described as ones of asymmetric power and Trump and his officials certainly seem to have gone into the war believing the asymmetric power balance lay firmly with them at a military level and with their cyber technology, not understanding that the threat to oil, and the lethality of drones, actually meant the balance was very much in the other direction.

Even with claims of the destruction of much of its missile capacity, Iran has continued to wreak havoc, maximising fear as much as weapons.

Despite often calling Iran a supporter of terror, there seems to have been little comprehension that Iran is now essentially engaging in terror tactics, state to state to maximise its advantage — and it has no real reason to stop.

That leaves the rest of the world to deal with the fallout.

Protagonists unmoved by international pressure

Iran's new Supreme Leader says flatly that US bases in the region have to close and will be attacked.

While Gulf states are furiously trying to stay out of the war, attacks on bases they host dramatically change the equation of their relationship with the US, even if they insist Iran will not drive a wedge between them and the US.

For Australia there is a question about the vulnerability of its base in the UAE and whether Iranian attacks will inevitably spread there. It has already been under fire early in the war.

If the US withdraws, many in the Gulf fear an extension of the sorts of bombardments and warfare seen in Gaza.

After Hezbollah essentially joined the war by firing rockets at Israel in support of Iran, Israel seized on the opportunity with all its military might: a sideshow to the main event that's quickly turned into a humanitarian disaster.

(A sideshow that has 800,000 Lebanese on the move as a result of an Israeli diktat that they must clear out of a 40-kilometre-wide band of land north of the Israeli border and seen the IDF hit central Beirut, away from known Hezbollah strongholds.)

The war aims of the US and Israel seem more transparently divergent than they have been in the past.

Benjamin Netanyahu would appear to think he has everything to gain — and a 40-year commitment to the humbling of Iran — from the war continuing, even if Trump has second thoughts.

Most disturbing of all however may be the fact that the three main protagonists in this fight — Trump, Netanyahu and the Iranian leadership — have all proved themselves unmoved by international opinion or pressure.

The scope for the rest of the world to have any influence on these events appears negligible.

Laura Tingle is the ABC's Global Affairs Editor.