This topic discusses the ongoing tensions between Israel and Iran and its implications on the markets.
S&P 500 futures down 1.6% after Israel launched a series of airstrikes in Iran, killing Iran’s head of Islamic Revolutionary Guard Corps
- Israel launched a series of airstrikes in Iran, leading to the death of commander-in-chief of Iran’s Islamic Revolutionary Guard Corps, Hossein Salami and two top Iran’s nuclear scientists, Fereydoun Abbasi-Davani and Mohammad Mehdi Tehranchi.
- Mohammadhossein Bagheri, chief of the Iranian Armed Forces was also killed in the attacks.
- Iran’s supreme leader, Ali Khamenei vowed to avenge the attacks while Israel’s prime minister Benjamin Netanyahu said the operation will continue for days.
- S&P 500 futures shed 1.6%, Nasdaq 100 lost 1.8%, Dow Jones industrial average dropped 1.4% while oil prices rose more than 9% following the news of the attack.
- US said it didn’t participate in the strike but President Trump was briefed beforehand and his Truth Social post suggests he endorsed it.
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Israel now says Iran has launched 100 drones at it in retaliation to the attacks. This is lower than the 170 drones that it launched in April 2024 attack. But they could be trying to create distractions as they plan a major attack. However, based on expert commentary, I believe the possibility of an all-out war is low (probably less than 30%). This is informed by;
- Disruption of nuclear progress: International Atomic Energy Agency (IAEA) recently published a report that said Iran now holds 408.6kg of uranium enriched up to 60 percent, a 50% jump from February. However, it’s estimated that it would take Iran 6 to 24 months to weaponize it (GP3 o23). The killing of the two top scientists and the attacks on nuclear sites derail their progress.
- US support: President Trump recently said that they would protect Israel if Iran retaliates. According to experts, unlike Israel, US has unique capabilities to destroy Tehran underground nuclear capabilities. Totally losing uranium enrichment facilities presents an existential threat to Iran. Therefore, Iran may avoid retaliating in a way that drags US into the conflict.
- Its proxies such as Hamas and Hezbollah are now weakened. In my opinion, Iran had better chance of standing up against Israel last year than now since its proxies were still in a good position to offer support.
Additional expert commentaries:
Futures rose over 1% following reports that Iran is seeking resumption of negotiations
- Iran has signaled through intermediaries that it is open to restarting negotiations as long as U.S doesn’t join the war, the Wall Street Journal reported citing Middle Eastern and European officials.
- They also send messages to Israel saying the want the war contained.
- So far Israel has shown little indications of ending the conflict, with its military saying it has prepared at least two weeks of strikes.
- S&P 500 futures rose 1.1%, Nasdaq Composite gained 1.5% while WTI Crude Oil futures shed 3.8% following the report.
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President Trump said “everyone should immediately evacuate Tehran”, signaling a ceasefire may not be in the offing
Trump threatens Iran in a series of Truth Social posts, asking the supreme leader to surrender unconditionally
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S&P 500 futures and Nasdaq Composite gained 0.9% as Iran’s response against US attacks were restrained and Trump announced ceasefire deal
- Iran’s response against US attacks over the weekend were restrained as its missile attacks against US military base in Qatar were intercepted and no casualties were reported.
- Trump also announced in Truth Social that Iran and Israel had agreed to a ceasefire.
- S&P 500 futures and Nasdaq Composite gained 0.9% as a result.
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Trump said U.S. is prepared to strike Iran if a deal over nuclear program is not reached in the next 10 days
- Trump announced yesterday that "BAD THINGS WILL HAPPEN’ to Iran if it doesn’t make a deal with the US over its nuclear program (first video).
- Meanwhile U.S. military buildup in the region is said to be the largest since the Iraq war in 2003.
- Some sources already reported that U.S. is prepared to strike Iran as early as this weekend but Trump is yet to sign off (second video).
- Some experts believe Trump may not be interested in regime change (min 3:27 and min 4:30 of second video).
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Here are two more videos.
The first and more important one focuses on the massive military buildup of U.S forces in Europe that could be used for an attack on Iran.
The second gives a rough idea (no idea how credible) how a war between the U.S and Iran could look like. (Including risks involved)
Assessment
Overall without more research it is hard to say how likely an U.S. attack is but I could several factors why they could strike including
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Irans weakened position after the loss of its proxies Hamas and Hisbollah in Lebanon
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Irans weakened position after Israeli attacks on Iran with the loss of many air defense systems
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Strong previous protests in Iran
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Emboldened Trump as previous attacks on Irans and Venezuela went well
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Strong pro-Israel stance of Trump and Jewish family members like Jared Kushner.
That means if Iran does not accede to some key U.S demand they might seriously consider a strike as they could see it as a opportune moment to “resolve” a long standing problem in the Middle East.
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I=9
Israel and U.S. have launched preemptive strikes against Iran
- The strikes are initially targetted at variety of positions inside the country (min 0:14 of first video).
- President Trump called on Iranian citizens to seize the opportunity, adding that bombs will be dropping everywhere (min 6:45 of second video).
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President Trump says combat operations will continue in Iran in full force until all their objectives are achieved
- This comes after Iran’s Supreme leader Ali Khamenei was killed in the attacks on Saturday.
- Iran on the other hand says there will be no negotiations with the US.
- Iran has been firing missiles to countries with ties with the U.S. such as Saudi Arabia, Qatar and Oman following the Saturday attack.
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Iran denies earlier New York Times report that it had reached out to USA for a ceasefire
The New York Times had reported on Sunday that Iranian operatives indirectly contacted the Central Intelligence Agency to discuss the terms for ending the war.
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Mojtaba Khamenei, son of Ayatollah Ali Khamenei was named yesterday as Iran’s new Supreme Leader increasing the risk of war escalation
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A bit more details about the Iranian system, the succession and the large amount of Iranian leaders that have been killed incl. Khamenei family members.
Assessment
Given the amount of personal losses that Mojtaba suffered in the last weeks I am not sure, if he truly would be capable to make decisions and lead Iran. It is possible that he was selected as the “face of Iran” to have a successor, while others in the background hold true power and take decisions.
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The Pentagon is sending thousands of additional Marines to the Middle East, the Wall Street Journal reported
- U.S. deploying around 2,200–2,500 additional Marines and multiple warships to the Middle East (total of 50,000 troops), signaling rising Iran-related tensions despite no “boots on the ground” stance by President Trump.
- Reuters also reported that Iraq has declared force majeure on all oilfields operated by foreign companies.
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Trump gave Iran 48-hour ultimatum to open Strait of Hormuz or he will “obliterate” their power plans but Iran responded they are ready to escalate the conflict further
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US sends Iran 15-point plan to end war, including a demand to decommission its three main uranium enrinchment sites
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President Trump told aides he is willing to end U.S. military action in the Middle East even if the Strait of Hormuz is not reopened, Wall Street Journal reported
- According to the officials, Trump and his aides ruled out a direct US military operation to forcibly reopen the Strait of Hormuz, judging it would extend the conflict beyond his preferred 4-6 week timeline.
- If diplomacy fails, they intend to push European and Gulf partners to take the lead on reopening the strait rather than doing it directly.
https://www.wsj.com/world/middle-east/trump-iran-war-strait-of-hormuz-ee950ad4
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