U.S. forces in the Gulf region and Iran continues to exchange increasingly heavy retaliatory attacks, as CENTCOM responds to the first recorded U.S. combat deaths from Iranian strikes since early in the conflict. Additional U.S. air forces appear headed to the region, while Iran has publicly suspended its adherence to the MoU, suggesting additional kinetic escalation is imminent.
At the same time, the tit-for-tat pattern suggests that some restraining guidelines remain in place, channeling new military strikes towards military targets, rather than against regional energy infrastructure and GCC urban centers. This suggests a relatively muted effect on global oil markets of ongoing combat activities in the coming days, with relatively slowly increasing prices leaving a longer window for military action to remain unconstrained by economic and political considerations.
The current high level of military strikes leads to higher risk of tit-for-tat strikes taking on their own dynamic, leading to an uncontrolled escalation towards Iranian and regional energy infrastructure. While this outcome is still not the base case, its probability (currently guesstimated at likely around 1/3) is no longer a “tail risk” and is rising, and will continue to do so as long as the current level of military strikes is maintained. Diplomatic avenues though are not yet completely closed – as indicated by Iran’s release of the U.S. detainee Dena Karari after 566 days of detention in Iran – and a new negotiated ceasefire remains the most likely (also guesstimated at 2/3 probability) eventual outcome to end the current escalatory cycle.
The current rise in military strikes – all started by Iran’s repeated targeting of ships transiting the Strait of Hormuz “unauthorized by Tehran” – is rooted in the MoU’s vague wording about the Strait of Hormuz, fundamental lack of trust between the parties, and Iran’s clearly revealed intention to maintain physical control over the Strait. This at least until such a time that a longer-lasting agreement with the United States is signed bestowing upon it a higher degree of political protection from future attacks and more importantly additional access to U.S. sanctions relief and access to frozen Iranian assets.
Evidently, the MoU provided Iran with a substantial amount of financial relief, but fundamental distrust of the United States and a case of “Iran overplaying its hand” in the face of rapidly declining oil prices, have seen Iran completely unwilling to cede any physical control of the Strait until it achieved even more from the negotiating table. This apparent hybris has now backfired on Tehran, as U.S. sanctions relief has gone, and the U.S. naval embargo is back in place. A new diplomatic push to solve the issue of “how to manage the Strait of Hormuz” hence remains the key to break the current escalatory cycle.
The focus on the Strait of Hormuz further has the consequence of pushing the issue of Iran’s nuclear program even further in the background, a factor also pushed by the clear exclusion of Israel from current (and likely) future strikes on Iran.
CENTCOM’s latest statement on its 8th day of strikes reveals several clues about the current thinking guiding U.S. escalation;
First, the focus remains clearly on Iranian military targets geographically located in Southern Iran near the Strait of Hormuz. This is an area where the U.S. has already also struck transport infrastructure around Bandar Abbas deemed relevant to Iranian force posture in the Strait.
The use of “degrading” in describing the intended effect on Iranian military capabilities indicates CENTCOM’s recognition that U.S. strikes will not be able to fully destroy these capabilities and hence cannot provide a “clear-cut military solution” to the challenge of Iranian de facto control of the Strait (e.g. implying that only negotiations can achieve this outcome). This is welcome departure from otherwise frequently misleadingly belligerent and triumphant statements on this issue by President Trump and other senior members of the Administration.
CENTCOM makes it clear, too, that it has expanded targeting to include elements of the IRGC involved in the deadly strike on U.S. forces in Jordan a few days ago. This strike illustrated Iran’s ongoing and plausibly improved ability to target U.S. forces in the region with the WSJ reporting “Iran has adapted to U.S. defenses, firing missiles that travel at extremely high speeds and can maneuver as they streak toward the earth, according to U.S. officials. Iran’s ability to hit sensitive targets also has raised concerns that the regime is getting targeting help from China or Russia, the officials said.”
The extent to which CENTCOM considers it an urgent priority to confront this improved Iranian ballistic missile capability remains unknown, but left unaddressed it will clearly continue to put U.S. military bases in the region at significant risk.
This could see a U.S. strike campaign against Iran continue with the intent to try to reduce Tehran’s ballistic missile capability (though meager results from earlier in the conflict highlights the task’s difficulty), setting the stage for a longer and more intense strike plan, less directly linked to the Strait of Hormuz than so far, and also somewhat less likely to see an escalation into regional energy infrastructure.
Economic pressure remains the most likely path to get Iran back to negotiations, as this conflict has shown to date that direct military pressure does not work. The timeframe for such economic pressure to work on Tehran and the likely new regional diplomatic initiatives to channel it, however, remains unclear and could well be measured in weeks, not days.
The risks that Donald Trump loses patience and, in the face of likely only gradually rising oil prices, orders additional escalation is hence material and gradually rising. Trump already earlier this week noted how “I’ll save the energy targets for last, but ultimately we’ll hit energy targets. Next week comes the power plants, next week comes the bridges unless they get to the table and negotiate.”
Should such an action be taken, Iran would surely respond with strikes on regional GCC energy infrastructure and likely seek to enlist the Houthis to try to strike targets around the Red Sea, too. This would essentially mark a new – albeit likely brief due to the severe economic consequences – uncontrolled phase of the conflict.
In sum, the shooting between U.S. and IRGC forces look likely to continue at an elevated level, though still avoiding critical regional infrastructure. Higher frequency tit-for-tat attacks, however, invariably raises the risk of a self-sustained escalation cycle. Oil prices and gradually rising economic pressures inside Iran remains the key forces working against escalation, and towards an eventual renewed ceasefire.
Jacob
