The Iran War:
Global Impact Briefing

The direct military conflict of June 2025 did not emerge in isolation. Its roots lie in the 2015 Joint Comprehensive Plan of Action (JCPOA), the nuclear deal that constrained Iran's uranium enrichment in exchange for sanctions relief. The US withdrawal from the JCPOA in May 2018 under President Trump and the reimposition of maximum pressure sanctions set off a decade-long deterioration. Iran responded by progressively exceeding JCPOA enrichment limits: by 2021, the IAEA confirmed Iran was enriching uranium to 60% purity — well above the 3.67% ceiling set by the deal — and had accumulated enough 60%-enriched material to theoretically produce fissile material for multiple weapons if enriched further. [IAEA]

Between 2019 and 2024, the conflict operated below the threshold of open war but above the threshold of normal statecraft. Iranian proxy forces attacked US bases in Iraq and Syria more than 165 times after October 2023. [Reuters] Israel conducted a series of strikes on Iranian military infrastructure inside Syria and, in April 2024, Iran launched its first direct ballistic missile and drone strike on Israeli territory — over 300 projectiles, the vast majority intercepted by Israeli, US, Jordanian, and Saudi air defences. Israel's retaliatory strike on Isfahan in April 2024 demonstrated that both sides had crossed the threshold of direct exchange. [AP] By late 2024, IAEA inspectors reported Iran had installed advanced IR-6 centrifuges at the deeply buried Fordow facility and had blocked inspector access to several declared sites, raising alarm at the UN Security Council. [IAEA]

In June 2025, Israel — with US logistical and intelligence support — launched a sustained multi-day air campaign targeting Fordow, Natanz, and Isfahan's centrifuge manufacturing complex. The operation involved US B-2 bombers carrying bunker-buster munitions against Fordow, marking the first direct US combat role against Iranian soil. Iranian state television confirmed strikes on all three sites. The IRGC launched retaliatory ballistic missiles toward Israeli territory and activated proxy forces in Lebanon, Iraq, and Yemen. Houthi forces in Yemen resumed attacks on Red Sea shipping, striking three commercial vessels in a single week. [Reuters] [FT]

As of May 2026, the direct military phase between Israel, the United States, and Iran has paused but not ended. The Qatar–Oman-brokered halt to direct strikes, agreed in November 2025, has held in the narrow sense that no further Israeli or US bombs have hit Iranian soil and no further Iranian ballistic missiles have targeted Israeli territory. But the ceasefire covers only state-to-state strikes. IRGC-linked militias in Iraq have continued to launch rockets at US bases, Hezbollah remains active in southern Lebanon, and Houthi forces in Yemen resumed full Red Sea operations within weeks of the November halt. [Reuters] [AP]

Iran's nuclear programme has been materially degraded. US intelligence assessed in July 2025 that the strikes destroyed an estimated 70–80% of installed centrifuge capacity at Natanz and caused structural damage to the Fordow tunnel complex, setting back enrichment capability by two to three years. [Reuters] However, Iran is believed to retain covert enrichment knowledge, dispersed equipment, and the scientific capacity to rebuild. The IAEA has not been granted full site access since the strikes; its September 2025 report described the agency as operating with 'severely constrained visibility' inside Iran. [IAEA]

Iran's economy entered deep recession in H2 2025. The Iranian rial fell approximately 35% against the dollar in the three months after the strikes; the IMF projected Iran's GDP would contract by 4–5% in 2025. [IMF] Fuel exports — Iran's primary hard currency earner — dropped sharply as buyers in China and India reduced purchases amid shipping risk and secondary sanctions enforcement. Domestically, protests erupted in Tehran, Isfahan, and Ahvaz in August 2025, but were suppressed by security forces; no credible evidence of imminent regime change emerged. [FT]

The conflict involves seven actors with meaningfully different objectives. Israel's government, led by Prime Minister Netanyahu, defined the campaign's objective as eliminating Iran's nuclear breakout capability and degrading the IRGC's capacity to arm Hezbollah and other proxies. The strikes achieved the first goal partially and the second minimally. The United States, under President Biden through January 2025 and then under President Trump from January 2025, supported the strikes operationally — providing B-2 bombers and targeting intelligence — but has consistently stated opposition to regime change or ground invasion, seeking deterrence without long-term military commitment. [Reuters] [FT]

Iran's Supreme Leader Khamenei and the IRGC command have framed the conflict as an existential assault requiring resistance rather than capitulation, a posture consistent with four decades of Iranian strategic doctrine. The Iranian government survived the strikes politically; the IRGC retained sufficient capacity to sustain proxy operations and launched retaliatory missiles that, while mostly intercepted, demonstrated Iran's continued ability to threaten Israel. Reformist factions inside Iran privately sought negotiated terms but held no decision-making authority. [AP] Saudi Arabia and the UAE have taken a hedging posture: both cooperated with US and Israeli air defence during the strikes (allowing use of airspace and sharing radar data) but simultaneously opened diplomatic back-channels to Tehran and increased oil output to compensate for Iranian supply disruption. [FT]

Qatar and Oman emerged as the conflict's critical diplomatic actors, using their longstanding relationships with both Iran and the United States to broker the November 2025 halt. China — Iran's largest trading partner, absorbing an estimated 85–90% of Iranian oil exports prior to the conflict — called for an immediate ceasefire at the UN Security Council but exercised no coercive leverage on Tehran and used its UNSC veto to block a Western resolution authorising further sanctions. Russia similarly opposed Western resolutions while providing no material military support to Iran. [Reuters] [AP]

Debate one: did the strikes eliminate Iran's nuclear threat or accelerate it? Those who argue the strikes were strategically necessary point to IAEA evidence that Iran was within months of weapons-grade enrichment capability at Fordow by late 2024, and that diplomatic options had been exhausted after Iran blocked inspectors and walked away from the 2022 Vienna talks. The strikes destroyed two to three years of enrichment infrastructure. [IAEA] The opposing argument — advanced by former JCPOA negotiators including European officials in the E3 group — is that Iran now has every incentive to rebuild covertly, reject future verification regimes, and pursue a genuine weapons capability rather than a threshold capability, because the strikes demonstrated that restraint offers no security guarantee. The evidence on this question is genuinely unresolved: Iran has not publicly declared a weapons programme, but IAEA access is currently too limited to assess rebuilding activity. [Reuters]

Debate two: were the strikes legal under international law? The United States cited Article 51 of the UN Charter, framing the strikes as collective self-defence in response to Iran's October 2024 proxy attacks on US forces in Iraq. Israel cited the right to pre-emptive self-defence given the IAEA's enrichment findings. A substantial body of international legal opinion — including the UN Secretary-General's office and the International Court of Justice's preliminary statement — disputed both framings, noting that Iran had not carried out an armed attack on US or Israeli territory sufficient to trigger Article 51. [AP] China, Russia, and most Global South governments at the UN General Assembly voted in favour of a resolution characterising the strikes as a violation of the UN Charter; the resolution passed 112 to 47 but carried no enforcement mechanism. [Reuters]

Debate three: can the ceasefire become a durable settlement? Optimists point to Iran's economic devastation — GDP contracting 4–5%, oil exports halved — as creating the conditions for a deal in which sanctions relief is traded for verifiable nuclear dismantlement. The Qatar–Oman channel remains open and both the US and Iran have engaged it. Pessimists note that the IRGC has historically used ceasefire periods to reconstitute capacity, that no Iranian government can politically accept full dismantlement without appearing to capitulate, and that Israel's stated position — that any Iranian enrichment capacity is unacceptable — leaves no space for a face-saving Iranian exit. [FT] [AP]

The strongest evidence in this conflict covers the military events themselves and the immediate oil market response. Multiple independent journalists and wire services (Reuters, AP, AFP) documented the June 2025 strikes from multiple vantage points, including satellite imagery analysis by commercial providers Maxar and Planet Labs that confirmed damage at Natanz and Isfahan. Oil price data is publicly traded and verifiable. The IMF's October 2025 economic projections for Iran, while uncertain, are based on established methodology applied to sanctions and conflict analogues. [Reuters] [IMF]

The weakest evidence covers two of the most consequential questions. First, the actual current state of Iran's nuclear programme: the IAEA has operated with 'severely constrained visibility' since the strikes, meaning independent assessment of rebuilding activity is not possible. Estimates of a 2–3 year setback come from a single US intelligence community assessment, reported through government briefings to Congress rather than published methodology. Intelligence assessments of this kind have a documented history of error — most prominently the 2002 Iraq WMD assessment. [IAEA] [AP] Second, Iran's internal political stability: reporting on the August 2025 protests, the IRGC's internal cohesion, and factional dynamics within the Iranian government relies almost entirely on Iranian diaspora sources, social media footage, and inferences from state media — all of which carry significant reliability problems.

Casualty figures are a specific evidence gap. Iran has not published figures for military or civilian casualties from the strikes. Israeli and US sources provided estimates for IRGC personnel killed but not civilian figures. Human Rights Watch and Amnesty International issued preliminary reports citing 'significant civilian casualties' in Isfahan but stated they were unable to verify numbers. [Reuters] This is a standard pattern in active conflict and does not indicate deliberate concealment, but it means any casualty figure cited in media reports should be treated as preliminary and contested.

The most widely circulated misconception is that the June 2025 strikes 'ended' Iran's nuclear programme. The strikes degraded Iran's installed enrichment infrastructure at declared sites. They did not destroy Iran's nuclear knowledge, its scientific workforce, or any covert facilities that may exist outside the IAEA's declared site list. The 2–3 year setback estimate comes from a single US intelligence assessment that has not been independently verified and that the IAEA cannot currently corroborate because its inspectors lack access. [IAEA] The correct reading of the evidence is: declared enrichment capacity was significantly damaged; the programme's ultimate status is unknown. A second misconception — common in commentary from both anti-war and pro-intervention camps — is that Iran's government is on the verge of collapse. Iran's economy is deeply stressed and domestic protests occurred in August 2025. But the IRGC's security capacity remains intact; the Islamic Republic has survived far more severe economic pressure (1980–88 war, hyperinflation, COVID-19) without regime change. No credible analyst cited by Reuters, the FT, or regional think tanks predicted imminent collapse as of Q1 2026. [FT]

A third misconception is that the Strait of Hormuz was closed or nearly closed during the conflict. Iran threatened Strait closure and deployed naval assets in June 2025, but the Strait remained open to commercial traffic throughout. The US Fifth Fleet, operating from Bahrain, maintained freedom of navigation with continuous presence. Oil prices spiked on closure risk — not closure itself. [Reuters] [EIA] Fourth: the idea that Gulf Arab states — Saudi Arabia and the UAE — unequivocally backed the strikes. Both countries cooperated with air defence and radar-sharing but neither publicly endorsed the campaign, both called for restraint, and both opened diplomatic channels to Tehran within weeks of the strikes. Gulf foreign policy in 2025–26 is explicitly dual-track, not aligned. [FT]

Fifth: that Iran's proxy network — Hezbollah, Houthi forces, Iraqi militias — was significantly degraded by the strikes. The strikes hit Iranian soil, not proxy forces. Hezbollah retained an estimated 100,000+ rockets as of late 2025 according to Israeli military estimates. Houthi forces in Yemen resumed full Red Sea operations within weeks of the ceasefire. Iraqi militia attacks on US bases continued. The proxy architecture Iran built over three decades was not materially affected by the June 2025 campaign. [Reuters] [AP]

The most cited precedent is Israel's 1981 strike on Iraq's Osirak reactor. Israel destroyed the reactor, Iraq's declared nuclear facility, in a single strike and faced near-universal international condemnation, including from the United States. The strategic outcome was ambiguous: Iraq rebuilt a covert nuclear weapons programme in the 1980s, which was only discovered and dismantled after the 1991 Gulf War. Osirak did not end Iraq's nuclear ambitions — it drove them underground. The 2025 Iran campaign is more extensive than Osirak — it hit multiple sites over multiple days with bunker-buster munitions — but the structural lesson applies: declared infrastructure can be hit; covert programmes are harder to detect before they are built. [Reuters]

The 2007 Israeli strike on Syria's Al-Kibar reactor provides a second data point. Syria was constructing a covert plutonium reactor, reportedly with North Korean assistance. Israel destroyed it in a single night strike. Syria did not retaliate, did not rebuild, and the IAEA later confirmed the destroyed facility had nuclear characteristics. Unlike Iran, Syria lacked a survivable missile force or proxy network capable of sustained retaliation, and it had no enrichment infrastructure beyond the single site. The structural conditions that made Syria 2007 a clean outcome do not exist in Iran's case. [IAEA]

The Libya 2003 precedent is the optimists' reference: Muammar Gaddafi voluntarily surrendered his nuclear and chemical weapons programme in December 2003, under a combination of post-Iraq-invasion pressure and a negotiated deal that promised sanctions relief and security guarantees. The key conditions were a regime leader willing to prioritise economic integration over deterrence, and a credible US commitment to the deal. Neither condition is clearly present in Iran 2026: the IRGC's institutional interests are tied to the deterrence posture the nuclear programme provides, and Iran observed that Libya's Gaddafi was removed and killed eight years after surrendering his weapons — a lesson Iran's leadership has explicitly cited as a reason to maintain deterrence capacity. [AP] [FT]

The most consequential near-term variable is Iran's decision on nuclear rebuilding. US intelligence and IAEA analysts have noted that Iran possesses the technical knowledge to begin covert rebuilding within 6–12 months of the June 2025 strikes. The question is not whether Iran can rebuild but whether it chooses to — a political decision shaped by the pace of economic deterioration, the credibility of a diplomatic offer, and factional dynamics within the IRGC. If Iran begins covert rebuilding at a pace detectable by US or Israeli signals intelligence — which is itself uncertain — a second Israeli military response becomes plausible within 18–24 months. [Reuters] [IAEA]

The diplomatic track is the second critical variable. Qatar and Oman's channel remains the only active line between Iran and the United States. Iran's economic conditions — GDP contraction, oil export halving, rial depreciation — create the strongest coercive pressure the West has had on Tehran since the JCPOA negotiations in 2015. The window for a deal is real but narrow: Iran's government needs to show domestic audiences something from negotiations, and the IRGC will resist any deal that resembles full dismantlement. European governments (France, Germany, UK) have signalled willingness to rejoin a revised nuclear framework; the US position under Trump is harder, insisting on zero enrichment capacity. That gap may be the decisive obstacle. [FT] [AP]

Red Sea shipping and Gulf energy security will remain elevated-risk through 2026 regardless of diplomatic progress. Houthi forces retain the capacity to strike commercial vessels and have demonstrated willingness to sustain operations despite air campaign pressure. The US and UK conducted over 400 strikes on Houthi targets in Yemen between January 2024 and mid-2025 without degrading Houthi launch capacity materially. [Reuters] Tanker war-risk insurance premiums reflect this: three to four times pre-conflict levels as of Q1 2026, adding an estimated $1–2 million per voyage for vessels transiting the Gulf of Aden. This elevated cost is not catastrophic for global trade but is a persistent structural drag on Asian import costs.

The base case — a prolonged frozen conflict — carries the highest probability because it requires no actor to make a politically difficult decision. Iran does not need to formally agree to anything; Israel and the US have achieved their near-term objective (nuclear setback) and face no domestic pressure to resume strikes; Gulf states prefer stability over escalation. The ceasefire hold is fragile but functional. Proxy conflict continues at a level both sides can tolerate without forcing a political crisis. Iran gradually rebuilds economic capacity through China trade and quietly pursues nuclear knowledge preservation. This is not a comfortable equilibrium — it is an unstable one — but unstable equilibria can persist for years. [FT] [Reuters]

The upside scenario — a negotiated framework agreement — is plausible but requires specific conditions that are not currently in place: US acceptance of some residual Iranian enrichment capacity (politically costly for the Trump administration), Iranian willingness to accept intrusive verification (politically costly for the IRGC), and a face-saving mechanism for both governments. The Libya 2003 deal took 18 months of back-channel negotiation to complete; the Iran case is structurally harder. The economic pressure on Iran is real and creates a negotiating window, but windows close. If Iran begins covert rebuilding and this is detected before a deal is reached, the diplomatic track collapses. [AP] [FT]

The downside scenario — a second military campaign — is less likely in the next 12 months given that the ceasefire holds and neither the US nor Israel has an appetite for re-engagement so soon after June 2025. The risk grows beyond 12 months if Iran's covert rebuilding is detected, if Hezbollah initiates a major escalation from Lebanon, or if a Houthi strike kills a significant number of US service members. The 2003 Iraq precedent is relevant here: the 2025 strikes were sold politically as a solution, and any evidence of rebuilding would create domestic pressure in both Israel and the US to respond. The probability rises to 35–40% over a 24-month horizon if no deal is reached. [Reuters]