As Trump cancels his envoys’ flight to Islamabad and Iran insists no negotiations are planned with the Americans, a casual observer might conclude this war is heading nowhere good. They would be half right. The current diplomatic impasse is the most dangerous phase of the conflict — but paradoxically, it is also the phase most likely to produce a deal.

The reason lies in the structure of the game itself.

Strip away the rhetoric and what you have is a multi-player strategic interaction with five principals: the United States, Iran, Israel, the Gulf Arab states, and Pakistan as mediator. Each has a distinct set of objectives. Each is operating under radical uncertainty. And each, whether they recognise it or not, is watching its leverage erode by the day.

The scenario matrix contains four outcomes, and the probabilities are not evenly distributed.

The Lose-Lose: Escalation Spiral

This is the Prisoner’s Dilemma in its starkest form. Both sides defect because neither trusts the other to cooperate. The Strait of Hormuz remains closed, oil prices spike further, Iranian civilians face deepening food insecurity and unemployment, US military costs balloon, and Gulf states absorb collateral damage from a war they never chose.

Economist Steve Keen, speaking on The Diary of a CEO in April, laid bare just how catastrophic this spiral could become. The Strait’s closure does not merely raise oil prices — it severs 20 to 30 percent of the world’s fertiliser supply, threatening a global famine within months. India alone could face critical fertiliser shortages within months, potentially jeopardising its June Kharif planting season. The same chokepoint controls roughly 30 percent of global helium production, without which semiconductor manufacturing halts — South Korea, which produces two-thirds of the world’s memory chips, has already launched an emergency investigation into the shortage. Australia, with only 30 days of oil reserves, cannot transport food from farm to city once supply is cut. As Keen argues, people think this war threatens their petrol prices; in reality, it threatens their food supply.

I assign this scenario roughly a one-in-four probability, but the tail risks nested within it are what make it truly terrifying. Keen identifies five ways the military conflict could unfold, and four of them live inside this lose-lose quadrant. First, nuclear........

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