As discussed in earlier notes, military action against Iran had over the last couple of weeks become the base case scenario. President Trump this morning announced that the United States and Israel have together now started military action against Iran. The announcement stated several extensive war goals for the operation: 1) No Iranian nuclear weapon; 2) destruction of Iran’s missile program; 3) annihilation of Iran’s navy; 4) elimination of the offensive military capability of Iran’s proxies in the region; and 5) an open invitation for the Iranian people to rise up against the regime. This sets the stage for a U.S. and Israeli military operation certainly at the large end of the expectations scale, and one that is certain to last a number of days, and likely a limited number of weeks.
U.S. and Israeli strikes have hit military and regime leadership targets across a wide range of Iran and in the capital of Tehran, and includes a strike against the Iranian allied proxy Kata’ib Hezbollah militia in Iraq. This suggests a clear strategy of trying to kill as many members of Iran’s regime and military leadership as possible in the first wave of attacks to sow confusion and try to prevent a coherent Iranian response to the strikes. Another main target will undoubtedly have been Iran’s mobile missile launchers and other missile production facilities, as the U.S. and Israel seek to immediately reduce Iran’s ability to retaliate. The scope of success of the first wave of attacks cannot yet be ascertained, but it should be expected that the Iranian regime will have expected a strike and have drawn lessons from the effects of Israel’s attacks last June. Its resilient capacity to retaliate to some degree should therefore be expected, given the sheer scope of Iran’s geography and the number of mobile missile launchers.
As expected, Iranian retaliation has been swift and extensive in scope, targeting U.S. bases across the Gulf region and Israel. The scope of Iranian retaliation is likely related to the need for the regime to “use them or lose them”, as Tehran will want to fire as many missiles as possible, before U.S. and Israeli strikes gradually reduce the number of available missile launchers. That targets in all Gulf Arab countries, expect Oman, have been targeted likely also has the political intent of trying to coerce the GCC leaders into putting political pressure on Donald Trump to stop the attack as soon as possible, or risk further Iranian attacks against U.S. interests on their soil.
Care must be taken when interpreting video footage from especially the Gulf region, as AI-generated fakes will be numerous and impacts may arise from falling missile debris rather than a successful Iranian missile strike. So far, as expected, Iranian retaliation has not directly targeted regional oil sector facilities, but rather U.S. bases across the region. While Iranian retaliation has been extensive in geographic scope, covering a number of U.S. allies in the region and Israel, it so far does not appear to have been particularly effective. Some impacts have been registered on the base of the U.S. 5th Fleet in Bahrain and from falling debris in the UAE, but no major impact or casualties reported in Israel. So far therefore from a military point of view, U.S. and Israeli air defense have been successful, though politically even limited Iranian attacks will likely benefit the regime among its supporters domestically and in the region.
The Houthis in Yemen have announced that they will in support of Iran restart strikes against U.S. and Israeli targets,again posing potential threats to shipping through the Red Sea and to the fiscal proceeds of Egypt from the Suez Canal.
It remains very early days, and as noted the success of initial U.S. and Israeli strikes cannot yet be established. Yet, the familiar pattern of Israel’s 12-day war against Iran last June does show some early indications of reestablishing itself. It is clear that the U.S. and Israeli forces can (again) operate across Iran more or less unchallenged, and Iran appears able to launch a sizable number of missiles against U.S. bases and Israel, but not inflict major damage. As in last June, this suggests that the air war will continue more or less until worthwhile targets run out and Donald Trump decides to end hostilities.
There is however nothing to suggests that the Iranian regime is collapsing, and indeed it is telling that seemingly a number of the same – claimed destroyed by Israel then – military targets struck last June have been hit again this morning. This highlights the resilience of the Iranian regime and the basic fact that unless the regime falls, it can relatively quickly rebuild many of its military facilities, meaning that in a strategic sense for the region, the current strikes are not likely to make much more difference than the June 2025 war.
The seemingly very high degree of operation coordination between Israel and the United States in these air strikes is a new and noticeable development, clearly showing that despite evident policy differences over Gaza and other items, the U.S.-Israel military alliance remains very strong. There is significant precedent setting effect here, and given that Iran is likely to rebuild some of its military capabilities after the war, another joint U.S.-Israel strike against it later in Trump Administration cannot be ruled out. This is particularly so, given that the official justification for the strikes offered by President Trump – Iran reconstituting its nuclear program, availability of highly enriched nuclear material and the development of intercontinental ballistic missiles by Iran– are at best questionable, but most likely simply exaggerated to fit a political decision already taken by Donald Trump. These types of justifications can be recreated quickly in the future again, should U.S. politics demand it.
The geographic scope of Iran’s retaliation to include U.S. facilities in most Gulf Arab countries has, as noted, likely the political intent of trying to coerce these governments into putting political pressure on Donald Trump to stop attacks. It, however, also means that the negative economic impact of this round of attacks is wider than last June, as airlines and other logistical operations in the region come to a possible weeks long halt.
Arguably the biggest joker now is the reaction of the Iranian people. Donald Trump in his announcement of the strikes issued a direct invitation for them to rise up again, and it cannot be ruled out that if in the coming days they again do rise up against the regime, that U.S. and Israeli air strikes become directly engaged in repressing the Iranian regime’s ability to put down such public uprisings. This could both prolong the air campaign, but also cause the Iranian regime to take riskier retaliatory strategies if popular demonstrations spread beyond their control, including possibly targeting regional oil installations.
In sum, war is always extremely uncertain as the “fog of war” prevails, and Donald Trump appears to have launched a strike on Iran with a wide mandate and Iranian retaliation has already spanned the Gulf region. Oil installations have so far been spared, and given that the U.S. and Israeli air campaign is unlikely to directly threaten the immediate survival of the Iranian regime, it remains the base case that Tehran will not escalate in the manner in the coming days or weeks. The impact on global oil markets should hence remain relative muted. Unless – and this is what should be most closely watched now in a war that otherwise looks a fair bit like a repeat of June 2025 – widespread public uprisings return in Iran as a consequence of renewed air strikes. This is the scenario in which the regional oil sector could be targeted by an increasingly desperate Iranian regime. It is also the scenario that is therefore most dreaded by Gulf Arab leaders.
Jacob
