On Tuesday, the United States and Israel intensified their military campaign against Iran, delivering what both Pentagon officials and eyewitnesses on the ground described as the most severe airstrikes since the conflict began. Despite this escalation, international financial markets maintained a degree of optimism, largely driven by expectations that President Donald Trump might seek to bring the hostilities to a close in the near future. This sharp increase in military action has significantly raised tensions, with Iran’s Revolutionary Guards issuing a stern warning that they would obstruct oil shipments through the strategically vital Gulf region unless the US and Israeli attacks cease immediately.
US Defense Secretary Pete Hegseth emphasized the scale and sophistication of the strikes during a Pentagon briefing, stating that Tuesday marked the most intense day of aerial bombardment inside Iran since the conflict erupted. He highlighted the deployment of the largest number of fighter jets and bombers, alongside enhanced intelligence capabilities that have improved targeting precision. This surge in military operations underscores the escalating nature of the conflict and the high stakes involved for all parties.
Meanwhile, residents of Tehran described the night of bombardment as harrowing and unprecedented in its intensity. One local, speaking anonymously due to security concerns, likened the experience to “hell,” recounting how bombs fell indiscriminately across the city, instilling fear even among children who now struggle to sleep. The previous day had already seen significant damage in eastern Tehran, where two five-story residential buildings were struck, leaving behind shattered walls and exposed concrete frameworks. Rescue teams from Iran’s Red Crescent were actively recovering bodies amid the rubble when a missile hit a nearby road intersection, further complicating rescue efforts.
Despite the escalating violence, financial markets appeared to respond with cautious relief following President Trump’s remarks on Monday, in which he described the war as “very complete, pretty much.” Investors interpreted this as a signal that the administration might be aiming to conclude the conflict soon, thereby avoiding a prolonged disruption to global energy supplies that could trigger a worldwide economic crisis. After an initial historic spike in crude oil prices on Monday, prices largely retreated by Tuesday, with Asian and European stock markets recovering from earlier sharp declines and Wall Street stabilizing near pre-conflict levels seen in late February.
Insights from an individual familiar with Israel’s military strategy revealed that the Israeli defense forces are attempting to maximize damage before the opportunity for further strikes diminishes, operating under the assumption that President Trump could decide to end the conflict at any moment. Israel’s Foreign Minister Gideon Saar echoed this sentiment, stating that his country does not anticipate a prolonged war and is actively consulting with Washington regarding the timing of a potential ceasefire.
President Trump’s press conference on Monday appeared to provide some reassurance to global markets, as he suggested that the United States had already inflicted significant damage on Iran and predicted the conflict would conclude sooner than the initially projected four-week timeframe. However, he refrained from reiterating previous demands that Iran must allow the US to select its leadership. Meanwhile, congressional aides anticipate that the White House will soon request up to $50 billion in additional funding to sustain the war effort, reflecting the high costs of ongoing military operations. A source disclosed that the US expended approximately $5.6 billion worth of munitions within the first two days of strikes against Iran, raising concerns about the sustainability of the campaign.
On the Iranian side, senior officials remained defiant in the face of mounting pressure. Mohammad Baqer Qalibaf, the speaker of Iran’s parliament, declared unequivocally that Tehran is not seeking a ceasefire and insisted that the aggressors must be dealt a decisive blow to deter any future attacks. Foreign Minister Abbas Araqchi further dampened hopes for renewed negotiations, indicating that Tehran is unlikely to engage in talks with the US under current circumstances. The conflict has effectively disrupted shipments through the Strait of Hormuz, a critical chokepoint through which roughly 20% of the world’s oil and liquefied natural gas transit. This disruption has forced some of the largest oil producers to reduce output as storage capacities near exhaustion.
Following the appointment of hardliner Mojtaba Khamenei as Iran’s new supreme leader, oil prices briefly surged to nearly $120 per barrel on Monday before retreating below $90 by Tuesday afternoon. President Trump warned that any attempt by Iran to block oil passage through the strait would be met with overwhelming force, vowing to strike so decisively that Iran and its allies would be unable to regain control of the region. In response, a spokesperson for the Revolutionary Guards asserted that Tehran would prevent even a single litre of Middle Eastern oil from reaching the US or its allies as long as the attacks continue, emphasizing that Iran itself will determine the war’s conclusion.
Should the conflict end swiftly, it is likely that Iran’s current leadership will remain intact. Large-scale rallies held in support of the new supreme leader on Monday demonstrated strong public backing, despite widespread domestic calls for political change. The elder Khamenei’s death, which occurred on the war’s first day, had been met with some public celebration, particularly after security forces violently suppressed anti-government protests weeks earlier. However, since the onset of the war, public dissent has largely subsided. Iranian state media report that at least 1,270 people have died since the US and Israeli airstrikes began on February 28. Additionally, Israeli strikes targeting Hezbollah in Lebanon, an Iran-backed group, have resulted in numerous casualties, including the deaths of four Iranian diplomats in a hotel attack on Sunday. Iranian missile attacks on Israel have also claimed 12 lives. Beyond military targets, Iran has struck US military bases and diplomatic missions in Gulf Arab states, while also damaging civilian infrastructure such as hotels, airports, and oil facilities, further complicating the conflict’s trajectory.
