Analysts say Iran’s security environment is chaotic and could escalate,
increasing geopolitical risk for markets. They note Iran’s military, proxy
network and economy have been degraded, leaving Tehran to rely on
Harassment-style attacks rather than conventional power projection; US strikes
so far have not reopened the Strait of Hormuz by force. Recent exchanges have
not escalated to all-out war: Washington has not targeted Tehran directly and
Iran’s responses have been largely limited and largely ineffective attacks on US
facilities in Bahrain, Kuwait and Jordan. Iran has not resumed strikes against
Saudi Arabia or the UAE. Command uncertainty following an injury to Iran’s new
supreme leader Mujtaba, and sharp criticism from hardline factions of last
month’s memorandum with the US, raise the risk that rivals within Iran could
seek to sabotage the agreement by escalating violence. Former CIA Middle East
official Marc Polymeropoulos cautioned that an incident causing US military
deaths could trigger a severe US response; Mehran Haghirian of the Bourse &
Bazaar Foundation says decision-making in Tehran is now confused and some
Factions benefit from prolonging the crisis.
