While shake-ups of command roles are to be expected given the differences between Hegseth’s ideology and that of the establishment, the dismissal of General George and Major General Green is more significant. This likely reflects differences on deploying ground forces to Iran and/or attacking civilian targets as part of President Donald Trump’s and Sec Hegseth’s promise to send Iran back to the stone age. The religious role of Maj Gen Green is significant, given how Trump and his allies have been selling the war on religious grounds, where Trump is saving the Jewish people from Iranians like Esther, and is being compared to Jesus Christ.

Furthermore, Bloomberg reports that Trump is planning to wage the 2026 midterm elections on the basis of building a war economy, with a 50% increase in defence spending to USD1.5 trillion dollars in the 2027 budget. Furthermore, Trump raised tariffs on aluminium, steel, and copper, with discounts for articles made overseas but from American steel, aluminium or copper.

Iran, for its part, is betting that the war will break the world economy before it has to give up.

Commercial Impact

Military Realities

• The mere threat of sending Iran to the stone age reflects a military failure: the Americans and Israelis have been bombarding Iran’s missile cities and attacking Iranian assets along the Strait of Hormuz. And yet, Iran keeps firing, and is in full control of the Strait.

• Therefore, the Americans have switched tactics, and, like Israel in Gaza, they are now targeting civilian infrastructure to break the will of the Iranian leadership. However, Iran will not go back to the stone age alone. And, just like Hamas in Gaza, it will fight until the war is politically unsustainable. However, as we discuss below, a long war may be precisely the point for the United States.

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Our interpretation of this chain of events is that Trump’s was implicitly offering Iran a deal: open the Strait in exchange for ending the war. With Iran refusing this proposal, Trump has now doubled down. In a speech late last night, Trump promised to bomb Iran into the stone age in the next two to three weeks, and to target their power generation, while threatening to target their energy production. As a reminder, Iran has more than 90 million people.

Unable to achieve his political aims, Trump has turned the war into a punitive campaign targeting civilian and dual use assets, hoping to break the will of the Iranian leadership before the global economy breaks. The Iranians are making the opposite bet: the world economy will break before they have to surrender. If our readers wish to understand the IRGC, they should think of the Taliban and the North Vietnamese. The IRGC are willing to fight twenty years if they have to, regardless of civilian suffering. And they want to force Trump into a ground campaign, knowing that that would eventually lead to a political change in America that favours them.

Therefore, the next phase of the war will be the most brutal and commercially damaging.

Commercial Implications:

• As the Americans escalate their targeting of civilian assets in Iran, the Iranians will now focus on eliminating the American and likely British business and diplomatic presence in the wider Middle East, including the GCC, Iraq, Jordan, and Lebanon.

• Furthermore, American and Israeli attacks on Iranian power are almost certain to lead to Iranian attacks on Israeli, Jordanian, Kuwaiti, and Emirati, power and water infrastructure. As the campaign escalates, Saudi Arabia also risks becoming a target.

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Trump is pressuring his European allies to go open the Strait of Hormuz themselves, while his Secretary of State says that the administration will reconsider NATO membership, due to NATO’s failure in supporting the American war in Persia. The relationship with Europe has never been worse, as Spain, Italy, and France close their airspaces to the American military.

Meanwhile, the cascading effects of Iran’s closure of the Strait of Hormuz are becoming more evident. Countries are going into lockdowns due to energy shortages, inflation is soaring, and growth is stifled. Trump is faced with a choice between a ground operation and simply walking away, leaving Hormuz to be opened by others.

Tempting as it is to throw a temper tantrum and leave, however, this is not a realistic option, and, if taken, carries all manner of unintended consequences, as we explain below.

Implications

If Trump declares a halt to operations in his speech tonight:

1. Trump will have lost all leverage over Iran’s ballistic missile and nuclear programmes: Iran will likely attack the Americans next time they attempt to build up forces in the region to launch a campaign over these issues, preventing the concentration of enough forces to even have a hope of winning.

2. American bases in the region would have been severely damaged, especially in Kuwait and Bahrain and likely the UAE. Any attempt to rebuild them will probably result in resumed Iranian drone and missile attacks.

3. Iran will continue to charge ships fees to pass through Hormuz. They may charge American ships extra to humiliate Trump.

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Our baseline assumption is that this war is going to be long, easily lasting beyond the 2026 mid-terms, and that it will expand into a ground operation that slowly grows in scale and ambition.

Our reasoning is simple: the Iranian regime will not fall through an air campaign. And a limited ground operation will likely lead to more Russian and Chinese support to draw the Americans in further, in the hope of depleting America’s ability to contest Ukraine and Taiwan. Iran will focus on convincing the Americans that remaining in the region is more costly than leaving. The consequences of the US abandoning its campaign right now, however, would be for Iran to turn the Strait of Hormuz into a toll booth, gaining the ability to blackmail all Gulf states and taxing their energy exports. This would make Iran the dominant player in global energy markets, alongside Russia. Furthermore, if the US backs down now, Iran would also be able to constrain Israel’s freedom of action against Hezbollah, and perhaps even Hamas and the Palestinian Authority. With the Houthi entering the war, this would also mean that the Houthi can charge fees for passage through the Red Sea. America’s role as guarantor of global trade and policeman of the seas would be over.

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On Truth Social, Trump said: “In accordance with the request of the Iranian government, please regard this message as an…

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The Americans are likely to target either the islands in the Strait of Hormuz (most likely), or Kharg Island, deeper within the Persian Gulf. Their most likely staging grounds and launch points will be either the UAE for the islands in the Strait, or Kuwait for Kharg.

The Iranians have warned that any country that allows its territory to be used as a staging ground by American forces launching a ground operation will have its infrastructure destroyed. Our view is that the Iranians have the ability to make good on these threats. We also believe that they need to make an example of states that permit further attacks on Iran.

Commercial Impact

• We therefore see a severe risk to civilian infrastructure, including critically, power and desalination plants, in the UAE and/or Kuwait for the duration of ground any operations. The integration of Gulf power infrastructure means that power outages are unlikely initially. However, there is no integrated water network. We advise residents to prepare accordingly.

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There has been media reporting on talks between the USA and Iran via intermediaries. We make four points:

1. A stop to the war would collapse the American order in the Middle East.

2. The positions of the two sides are very far apart. Each is still asking for terms that, to the other, appear like surrender.

3. The Iranians are demanding other negotiators than Steve Witkoff and Jared Kushner, given their proximity to Israel and their failure to even bring a technical team to previous nuclear talks. That alone reflects their unseriousness in past talks.

4. The mediators are Turkey, Egypt, Pakistan, and potentially Oman. None of them has the ability to produce trustworthy security guarantees from the Iranian perspective. Only Russia or China can make such guarantees.

Ground operation vs negotiations

Meanwhile, the Americans are continuing a build-up of ground forces, by sea but also in Jordan and Israel. We make three points:

1. Trump appears to be buying time with negotiations to prepare for further escalation.

2. Even if Trump isn’t, the Iranians will assume as much, given past precedent.

3. All ground options against Iran are terrible.

Iran is built like a fortress. Persia has only been invaded by the Assyrians, Alexander the Great, the Muslims, and the Mongols. Pete Hegseth may share some of Genghis Khan’s moral views (though not on the sanctity of diplomacy), but not his military genius. Moreover, Iran’s geography means that none of the American options - capturing some islands, capturing the territory around Hormuz, or attempting to invade Iran via Jordan, Iraq, and Kuwait - are viable with the size of the forces currently deployed, or, even, ever. The American public will not tolerate sending half a million soldiers or more to defeat Iran.

Why ground operations and threats against power?

The threat to launch a ground operation is itself an act of desperation. The Americans likely believe that they could perhaps take out Iran’s underground missile bases and nuclear facilities through Special Forces - the preparations are not large enough for the deployment of regular infantry and mechanised or armoured formations. Iran’s missile cities must have proven to be resilient enough to air attack. Iran has demonstrated that it can still strike targets with precision when it wants to. Because the war has not achieved its aim of neutralising Iran’s missiles, Trump has threatened to strike power stations, which he may still do. And because Iran can still retaliate, he has temporarily backed down, and is now building up ground forces. However, we repeat, they are nowhere near the level required for a major operation.

The cost of ending the war

The problem facing Trump is that, having involved himself in this war of choice, exiting it is more costly than trying to see it through.

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Is this credible?

There are some reasons to believe Trump, including:

• Iraqi pro-Iran militias had agreed to a 24-hour ceasefire in Iraq to allow the Americans to withdraw from Camp Victory near the Baghdad International Airport. This could not have happened without some communications.

• Moreover, the Iranians have shown that they can hit targets that they want to hit. Strikes on power would almost certainly be met in kind, just as the strikes on Iran’s energy were. Air defence systems have shown their severe limits.

• Without this kind of destruction, the Iranians could hold out for many months, requiring an unfeasible ground intervention or an open-ended war that wrecks Gulf energy.

• The Omanis, Qataris, Turks, Egyptians, and Russians have been contacted to mediate the conflict.

• It is evident that a major economic collapse would result from this war continuing. This was the main reason we thought that a war would have to be brief.

• There was always the possibility of Trump backing down.

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The USS Boxer and the USS Tripoli amphibious ready groups are being moved towards Iran, carrying around 5,000 Marines. There are also reports that the 82nd Airborne is close to being activated, with another 4,000-5,000 soldiers. All these forces are specialised in assaulting hostile shores.

Meanwhile, Trump is threatening to destroy Iranian power infrastructure, leading to threats of retaliation from Iran.

In reality, there is NO WAY for the Americans to re-open the Strait of Hormuz except through a deal with Iran. This is why Trump is escalating his threats, and saying that he would strike Iran’s power infrastructure within 48 hours.

Ground operation?

The Trump administration is reportedly considering using ground troops to seize Iran’s Kharg Island, where most of its oil export capacity is located, or to open the Strait of Hormuz by seizing islands and territories around it, or a combination of both.

We try to avoid using strong language, but, we must say that sending ground forces is delusional. We do not dismiss the possibility that it would be attempted, but we do dismiss the possibility of success, for the following reasons:

1. Hormuz contains several islands, as per the map below. Each is equipped to attack ships and defend itself, and each will require its own separate and lengthy operation to capture and neutralise it. In WWII, islands of comparable size required tens of thousands of men to capture.

   

2. Securing Hormuz would require not just neutralising these islands, but also the entire surrounding mountainous area. This is another incredibly costly adventure, where every winding road, every cave, every valley, is a potential ambush site or a location where IEDs can be deployed. It will not be enough to conquer the coastal strip between Shenas and Jask (map below), as the hinterlands will be used to launch an insurgency. Drones, missiles, fishing boats with sea mines, and naval drones can be launched from anywhere in that entire area, and can be used to attack ships with minimal cost. The Strait of Hormuz would remain contested even as troops on the ground fight a costly insurgency.

   

3. Assuming that the islands in Hormuz AND the terrain around the Strait are all secured, Iran would still retain the option of attacking any ship in the entire Persian Gulf, especially near Qatar, Kuwait, Bahrain, and Saudi Arabia’s Ras Tanoura oil export terminal. Meaning that the Americans would need to control entire Iranian coastline along the Persian Gulf. Iran does not need to shut down Hormuz - it can attack any ship at sea in the Persian Gulf if it wanted to. Even if Hormuz is opened, the Persian Gulf would become a shooting gallery targeting ships.

   

4. Assuming that, miraculously, the Americans secured the islands in the Strait, secured the territory around Hormuz, and secured the territories from Hormuz to Basra, the Iranians would still have the option of firing missiles and drones at every hydrocarbons and refining target in the GCC - at every refinery, processing plant, port, and oil rig. Iran would almost certainly choose to render the Strait of Hormuz irrelevant - by destroying the assets that make it valuable - rather than let the Americans open it by force.

Power infrastructure and Iran’s retaliation capability

After Israel struck in close proximity to Iran’s Bushehr Nuclear Power Plant, Iran retaliated with an attack on Dimona, where Israel’s nuclear programme is located - which includes nuclear weapons. This follows Iran’s successful 19 March attacks on Gulf energy infrastructure like Ras Laffan in Qatar, which were in response to an Israeli strike on Iran’s South Pars Gas Field processing facilities at Assaluyeh.

With this in mind, Trump’s threats to Iranian power infrastructure reflect desperation and the lack of any plan. Both the Trump administration and the leadership of the GCC know that Iran can retaliate in kind to attacks on its power infrastructure. Furthermore, Gulf power supply often is integrated with desalination plants: attacks on Gulf infrastructure can eventually trigger a massive humanitarian crisis and require the evacuation of millions of expatriates.

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As discussed in a previous assessment, there is no reason to expect the war to end soon, though Trump retains the option of trying to walk away.

In this piece, we examine some of the most vulnerable countries and the issues they face.

Egypt: Heading towards a failed state?

Egypt is a net energy importer, which received natural gas by pipeline from Israel, and subsidised liquified natural gas from Qatar. Both sources declared force majeure due to the war, leading to immense shortages that can only be replaced with very expensive LNG. Furthermore, Egypt is one of the world’s largest grain importers, the prices of which are set to spike. And it depends on USD5 billion every year from the UAE to maintain the stability of its balance of payments. Furthermore, Egypt relies on extensive capital inflows into its bond and stock markets, which are very vulnerable to sudden withdrawals. Last, Egypt depends on remittances, much of which come from the GCC. With the Gulf economies paralysed, these are set to fall suddenly. Not to mention the possibility of the Houthi shutting down the Red Sea, driving a large drop in Suez Canal revenues. The general insecurity in the region is likely to hit tourism, another key foreign currency earner.

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On 18 March, Israel, likely flying through Saudi airspace, attacked Iran’s South Pars gas field’s processing facilities. Reportedly, the Israeli-American thinking was that this would signal to Iran their willingness to hit Iranian energy infrastructure and paralyse the Iranian economy, and would therefore convince Iran to back down on the closure of Hormuz.

Within hours, Iran responded by attacking the Ras Laffan industrial zone, which has the main gas processing facility in Qatar, the Pearl Gas to Liquid facility, and Ras Gas, as well as unclear assets in Saudi Arabia.

Critically, Saudi authorities claimed that they had intercepted all four Iranian missiles targeting Riyadh, while video evidence showed that at least two missiles hit their targets, likely involving fuel storage. Similarly, in the UAE, the gas processing facility at Habshan was struck, with the government acknowledging that “falling debris” caused a fire. Moreover, Hezbollah reportedly targeted Ashkelon, where Israel has the Chevron gas processing facility linked to the Tamar field. The precise location of the hit has not been confirmed.

Understanding Iran

The Americans and Israelis do not have an accurate mental model of Iran. As confirmed by both Oman and Britain, the Iranians had made almost every possible concession to the United States during the nuclear talks, (to which the Americans did not even bother to send a technical team). The Iranians were being rational. They understood how destructive an American war would be, and tried to avoid it.

However, when it was obvious to us that the war was starting the next day, the late Iranian Supreme Leader Ali Khamenei remained apparently above ground, in his compound, the location of which was publicly known. Khamenei wanted to be killed, or, in his view, martyred. He calculated, likely correctly, that his death would inspire the entirety of the Iranian armed forces and political leadership, and convince them to wage this battle to the bitter end. The Iranians are now in martyrdom mode. They are no longer rational.

Therefore, rather than de-escalate in the face of threats, which they know the Americans and Israelis can act on, the Iranians will double down. They are all-in.

Iran gains escalation dominance

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Iran and the USA

US strategy:

The Americans are conducting airstrikes deeper within Iran. Their view is that they have gradually eroded Iran’s defences, destroying their navy, attacking ballistic missile and drone bases in the West and South of Iran, destroying the Iranian air force, and more. America is fighting this as a classic war, targeting enemy command and control, leadership, etc… They view the fall in Iranian attack frequency as a sign of success.

The reality is slightly different: America’s Gerald Ford Carrier Strike Group has refused to cross through Bab al-Mandab, likely due to the Houthi threat. The Ford aircraft carrier itself has reported a fire that burned for 30 hours, requiring to return to Greece for maintenance. The official narrative is that the fire was caused by an issue with laundry facilities; previously, there were rumours that the ship’s sailors had sabotaged the plumbing system, requiring a repair stop in Greece before deployment. The George W Bush CSG is set to relieve the Ford, which has been deployed for ten months, longer than the typical six months.

The Abraham Lincoln Carrier Strike Group is reportedly operating south of Oman, meaning that the Americans are concerned about Iranian anti-ship missile capability. It appears that up to 5000 soldiers are being rushed to the region for a ground operation, perhaps with the intention of seizing the islands at and near the Strait of Hormuz - that appears far less unrealistic than targeting Iran’s oil export terminal hub at Kharg Island. A ground campaign of any size is typically the start of a much larger and lengthier commitment. This was supposed to be a relatively quick air war. A ground campaign will turn it into a quagmire. Recall that one of Osama bin Laden’s goals on September 11, 2001 was to force the Americans into a lengthy ground campaign against the Muslim world.

Despite the trouble in the American strategy, America’s main advantage remains the same: the American homeland is invulnerable, and the Iranians are stuck fighting on their own borders and in their own country, while the Americans are unaffected except economically and politically. The key issue is that the credibility of the entire political system has been shot by the interventions in the Middle East, the 2008 Global Financial Crisis, and the response to COVID-19. Trump was the American voters’ response to these failures. Our view is that a prolonged and expensive war will break the system.

Iranian strategy:

The Iranian rate of fire dropped significantly from the first few days. However, this is the type of war that Iran has prepared for. Iran’s missile and drone cities are underground, with the tunnel entrances and above ground components, such as power, being vulnerable. Therefore, as entrances are destroyed by airstrikes, Iran may be halting attacks from these bases until they are re-opened. Like Hezbollah in 2006, Iran will focus on firing bigger salvoes when it assesses that the war is near its end, to demonstrate the futility of America and Israel’s campaign. If it fails to do so, its ability to spin a victory narrative would be dramatically reduced. In the interim, steadfastness and economising on ordnance used makes most sense, from Iran’s perspective.

Furthermore, Iran has successfully damaged American bases throughout the region, to varying degrees, and with a focus on radars. This has led to a fall in detection times of Iranian attacks. The Americans are sending AWACS aircraft likely to enhance their detection capabilities. Critically, Iran showed Gulf states that the Americans cannot guarantee their security or deter Iran, nor can Gulf states remain neutral. This will force a rethink in Gulf states’ security arrangements, which is itself a success for Iran.

Iran’s plan is for this to be a prolonged war that saps American political will by continuing to pressure the global economy. That the Iranians have not yet attacked critical energy assets like Habshan and Abqaiq oil processing facilities in the UAE and Saudi Arabia shows that Iran is not yet in a desperate position, and that the political leadership remains in charge.

With all that said, however, Iran remains in an extremely unfavourable position: it is a nation state being forced to fight as an insurgency, with its airspace deeply penetrated by the Americans and Israelis. Its prime industrial assets are being destroyed. Its leaders are being killed, though whoever replaces them will be more wily and more committed. It is in a battle for survival. But the Iranians believe they have no choice but to continue, regardless of the losses they take. It is worth recalling that the earlier generation of jihadis took inspiration from Vietnam, and believe that a long and gruelling, albeit uneven war, is the only way to defeat the American Empire.

Duration of the war

The issue is this. Trump wants to declare victory, but, he has not achieved anything lasting: within 18 months of the war ending, we will be back to where we started, exactly as Israel has found itself with regards to Hezbollah.

The longer the war continues, the more of a failure it appears to be if the Islamic regime survives. Moreover, Trump has insulated himself from the anti-Israel, foreign policy realists, and America First elements of his political network. Those who remain around him are Israel First, and will advise him to continue the war just another few weeks or just another few months. Eventually, will it be just another few years?

The Iranians want to convince the USA to leave the Gulf. This will only happen if the Gulf states commit to forcing the Americans out, including by denying them overflight rights. The Americans will not do so willingly. Therefore, unless Iran is thoroughly crushed, with its infrastructure destroyed, this war continues until the Americans give up. And, even then, it is worth recalling Serbia, which withstood 78 days of attack, including the destruction of its chemicals, energy, and other infrastructure. Iran is nineteen times larger than Serbia with fifteen times the population. Serbia at the time did not have Russian military backing, which Iran almost certainly does, especially in terms of communications support, intelligence, surveillance of American assets, and signals intelligence. Moreover, Iran has an open supply line to Russia and China via the Caspian and Turkmenistan.

Therefore, unless an end to the war is negotiated, 78 days is the lowest estimate for the duration of the war. We are now on day 18. American President Donald Trump can declare victory at any time, but this would leave Iran as the dominant player in the GCC and therefore OPEC+, in partnership with Russia. If Trump walks away, Iran may continue to target Israel, turning this into a potential political disaster for Trump. Simply, there is no way out for Trump that does not destroy his political standing. He’s stuck, and sending ground troops will only lead to more ground troops being sent.

Negotiations?

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Meanwhile, Israeli targeting in Lebanon is intensifying along several fronts:

1. Attacks on suspected or alleged IRGC/Hezbollah officials, including in hotels well outside Shi’a areas.

2. Attacks on bridges connecting the rest of Lebanon to the area south of the Litani River, intended to sever ties between the two sides before a full-scale invasion of the south.

3. Threats of attacks on state infrastructure with the aim of compelling the Lebanese government to disarm Hezbollah.

Lebanon has already attempted to comply. It has banned Hezbollah’s military activities and the IRGC, but, simply, the leadership of the Lebanese armed forces knows that it lacks the military capability to implement these directives. Now, Lebanon is offering to negotiate directly with Israel, with the French allegedly proposing that Lebanon recognise Israel. The Lebanese government is likely willing, but, its position is irrelevant. Hezbollah will retain a veto so long as it is armed, especially if it performs relatively well in this war. And Lebanon cannot recognise Israel without Syrian support, given the country’s dominance over the country’s land borders, and the presence of millions of Syrians in Lebanon. Not to mention the presence of Lebanese Sunnis, who view the new Syrian regime as their true leadership. Syria, for its part, cannot recognise Israel so long as Israel occupies new Syrian territories captured since the fall of Assad. It may, however, acquiesce to Lebanese normalisation, while retaining the option of using that as a wedge issue against the Lebanese government in the future.

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This is not a random attack. Trump had warned Iran against closing Hormuz, and this was Iran’s response. Iran is likely saying t…

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The war’s objectives

That said, despite the immense damage to Iran, its leadership, and its infrastructure, the Americans and Israelis have not achieved any of their declared objectives. Iranian missile strikes on Tel Aviv are penetrating the Israeli layered air defence systems regularly. Iran’s stockpile of 60% enriched uranium is still there. Iran is still able to shut down the Strait of Hormuz, despite massive losses to its naval assets. The world economy is reeling without the Houthi even entering the war yet. And the new Supreme Leader of the Islamic Revolution, Mojtaba Khamenei, Ali Khamenei’s son, remains in power. The regime has not changed.

If the Islamic revolutionary regime remains in power, even under another Supreme Leader after Mojtaba is killed, it will be more likely than ever to pursue a nuclear weapon, double down on its ballistic missile programme, and try to strengthen its proxies further. Iranian ties to Shi’a groups in Iraq, Syria, Lebanon, and Yemen are organic, and predate Khomeini’s revolution by centuries. Iran will try everything it can to position itself to deliver a much stronger first or early strike against Israel in the next war, since Israel and the Americans have made it obvious that they may strike Iran at will. Arguably, the regime has become more hard-line on security issues.

Iran’s response

Critically, the madman theory that Trump is operating under by its very nature invites challenge from those who claim to be even madder. If there is a ceasefire with the regime surviving, Iran would have shown that it is the bigger madman, encouraging others to try to do the same, but also requiring it to be even madder still in the next round. For the Iranians, closing the Strait of Hormuz, which Trump warned them against, is non-negotiable. Already, attacks on shipping have resumed as a response to Trump’s threats. The Iranians need to cause enough damage to gain deterrence, which is why they may need the war to continue, regardless of the cost. They cannot have a situation in which they suffer a yearly bombing campaign.

A new balance of power

Moreover, American bases in the Middle East, especially radars, have been heavily damaged. Gulf allies realise that the Americans cannot protect them from Iran, making Iran now the most influential state in OPEC: countries that refuse to cut output in favour of Iran can expect a drone in an oil field or an airport.

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The Houthi will also almost certainly re-impose their naval blockade, targeting primarily European and American shipping, and all shipping related to Israel. Moreover, Houthi involvement will disperse the American effort, giving Iran more time in which it can pursue its strategy of destroying the world economy to force the Americans to back down.

All fronts activated

The Houthi are the only Iranian ally/proxy not yet activated. Hezbollah is engaging targets in northern Israel and sometimes Tel Aviv. It is focusing on radar infrastructure in a bid to facilitate Iranian strikes. The Iraqis are attacking American bases, including Kurdish energy and airports, and American companies in southern Iraq. The aim, similarly, is to deplete and distract the Americans. Additionally, it is very likely that countries in Latin America or Nigeria will witness attacks on American and Jewish interests, as part of a global Iranian campaign.

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Executive Summary:

In this piece, we discuss four scenarios. The key commercial impacts of these scenarios can be:

• Iran becoming the leading country in OPEC, given its ability to threaten all Gulf energy production.

• Iran turning into a failed state, with militants regularly attacking shipping, energy, power, and other assets to extort their neighbours.

• An inconclusive war drawing Turkey and Iran into conflict, or Turkey and Israel.

• A nuclear exchange that normalises the use of nuclear weapons.

Key events:

On 7 March, Iranian president apologised for targeting Gulf states, and said that the ruling council has ordered the halting of military attacks against states whose territories are not being used to target Iran. Following another Iranian attack on Dubai International Airport, however, Emirates Airlines halted all flights from Dubai.

On 7 March, American media carried a report claiming that the Houthi were ready to enter the war.

On 6 March, Trump declared that he expects from Iran unconditional surrender. American officials have not ruled out deploying combat troops, though there is clearly a “leaking war” going on between administration officials to blame one another.

On 5 March, the rate of fire of Iranian missiles and drones dropped precipitously. However, this escalated again in the following two days, with new missiles brought online.

On 4 March, OSINT media reported an Azeri military build-up along the border with Iran. Furthermore, Kurdish forces from Iraq into Iranian territory are also being deployed.

Also on 4 March, the Iranians had lobbed a missile into Turkey, which was intercepted. This most likely targeted infrastructure linked to the Baku-Tbilisi-Ceyhan Pipeline (BTC). There were also unconfirmed reports of three drone attacks against the BTC.

America’s strategy: break the state

Throughout this war, the Israelis and Americans have been targeting border security in Iran, as well as police, internal security, and all basic state structures. The objective is to simply collapse the state as state, not just the regime.

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