The fragile Iran peace deal has collapsed and the US and Iran are back in open conflict, bad news for oil markets, Gulf countries, and anyone hoping the region would calm down.

• A deal that promised Iran $300 billion in funding fell apart over the Strait of Hormuz, the waterway carrying a fifth of the world's oil.
• Iran wants to charge ships tolls to pass and keeps attacking vessels; the US refuses and has bombed hundreds of coastal targets in response.
• Trump reimposed his blockade on Iranian ports and told Congress he is starting a new war, giving himself 60 days to act without approval.
• Retaking the strait by force would likely need tens of thousands of ground troops and tie up much of the US fleet, a huge gamble.
• Cheap Iranian drones cost about $20,000 while the US interceptors that stop them cost millions, so the math favors Iran.

Outlook: With diplomacy dead and Iranian nationalism hardening support for the regime, the fighting looks set to escalate rather than wind down.