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 large

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.