Abstract The Gulf of Aqaba (GoA) is the seismically most active region in the Red Sea, with a history of large earthquakes and posing a high seismic hazard to coastal communities. This study uses back‐projection and dynamic rupture simulation to investigate the largest instrumentally recorded earthquake in the GoA, the 1995 Mw ${M}_{\mathrm{w}}$ 7.2 Nuweiba earthquake, to understand stress loading, failure mechanisms, and cascading rupture potential on complex multi‐segment fault systems. Our results reveal a multi‐segment cascading rupture with supershear rupture on the optimally prestressed Aragonese Fault. Supershear rupture significantly amplified offshore ground shaking, elevating seismic hazard for the narrow gulf’s coastal regions. This event partially ruptured the GoA fault system, increasing Coulomb stress on the unbroken southern Arnona Fault, which has been silent since 1588. This stress loading likely advanced a future rupture on this critical segment, requiring close monitoring and increased preparedness for a potential large earthquake in the region.