International credit rating agency Standard & Poor’s (S&P) reported that the intensifying conflicts in the Middle East pose a significant risk to the credibility of the region. A statement from S&P Global mentioned that since September, it seemed that Israel’s military focus shifted from Gaza to the north, indicating that the conflicts have intensified more than previous expectations since October 2023. The statement highlighted that the enmity between Israel and Hezbollah increases the potential for a more harmful action-reaction cycle, which could draw more countries into the conflict. Pointing out Iran’s greater retaliatory power, the statement suggested that despite the increasing trend of direct hostilities between Iran and Israel, ultimately, the economic and security consequences will limit the scope of Iran’s direct responses and prevent intensified direct conflict. The statement conveyed that the regional stress levels are considered “moderate,” with the warning that “high” stress factors could potentially develop. It mentioned that so far, the impact of the conflicts on credit ratings has been limited to Israel and Lebanon, but expressed the anticipation of several potential ways in which the conflict could have a more significant credit impact on the rest of the region. Describing the conflict as now “more complex and unpredictable,” the statement indicated that geopolitical stress factors affecting the region’s ratings include changes in energy prices, trade route security, tourism revenue, money transfers, and potential capital outflows, which could affect countries in the region in different ways. Emphasizing that some countries may be more or less sensitive to certain stresses, the statement mentioned that developments in the region and their effects on credit ratings will continue to be monitored. The statement noted that significant economic disruptions have intensified for Israel and Lebanon and could increase in the region, highlighting the potential emergence of downward rating pressure. It conveyed that the conflict is now seen as “more complex and unpredictable,” with a higher likelihood of continuing until 2025.