U.S. President Donald Trump has started military action against Iran to destroy its nuclear and missile capabilities and to topple the regime. The brief June 2025 conflict is a poor guide to what is likely to follow. Then, Iran sought to avoid confrontation because it understood U.S. objectives were limited, meaning that regional relations and wider international legitimacy were worth preserving. Now, it perceives maximalist U.S. objectives. Determined to survive, Iran might initially hunker down or seek to draw out any conflict. However, in an existential struggle, it has signaled it is willing to use every tool in its arsenal. This raises the possibility, or probability, of an extended and wide-ranging regional military conflict with shock waves across the global economy.
On Feb. 28, in an eight-minute video, U.S. President Donald Trump announced the start of a ‘massive and ongoing’ operation, in which he claimed U.S. casualties were possible, but U.S. victory was inevitable.
Importantly, Trump explained U.S. objectives. First, to ensure that Iran never obtains a nuclear weapon. Second, to eradicate its ability to strike U.S. forces in the Middle East and farther afield with its ballistic missiles; he repeated the notion, raised in his State of the Union address, that Iran was moving toward developing a missile that could reach the United States. Third, to bring an end to the Iranian regime. Addressing the Iranian people, he said “your freedom is at hand.” Addressing the country’s soldiers and police, he invited them to surrender their weapons and obtain immunity or face certain death.
The End of Diplomacy
As the U.S. assembled a huge military force in the Gulf region in recent weeks, U.S. negotiators sought an agreement covering Iran’s nuclear program, ballistic missiles and network of regional proxies, known as the Axis of Resistance. Iran signaled it was prepared to entertain only a narrow nuclear deal that preserved its right to enrich uranium.
Before Trump spoke on Feb. 28, there were three potential objectives for U.S. attacks: to force Iran to lower its negotiating demands; to seek to degrade or destroy the Iranian capabilities on which U.S. negotiators were focused; or to cause the collapse of the Iranian regime. While most of his speech suggested the second objective, he ended with a clear call to achieve the third.
This paves the way for a regional war in which Iran’s rulers fight an existential struggle. It is likely to be very different from the limited conflict that they fought against Israel and the U.S. last year, which culminated with the U.S. bombing Iranian nuclear facilities and Iran responding with a telegraphed, nonlethal strike on U.S. facilities in Qatar. Iran will seek not only to survive, but to achieve a reset of the highly unfavorable regional situation in which it finds itself. This requires a shock that can only be achieved through a major conflict.
Iran’s Situation
The Iranian leadership faces its most serious crisis since the war with Iraq in the 1980s. In August it re-established the National Defense Council under the Supreme National Security Council, a body that existed during the long conflict with Saddam Hussein’s Iraq.
The economy is suffering huge strain as a result of intensified sanctions and heightened regional tensions. The currency has experienced progressive collapse. Government economic policy shifts, including an increase in subsidized petrol prices and then the removal of the preferential exchange rate for essential goods imports in late December, have worsened the immediate pressure on households. Food prices rose by 90% year-over-year in January, with headline inflation running at 60%. Seeking to ease the strain, the authorities have issued food vouchers to families.
Society is still reeling from the bloody crackdown on protests in early January. The government reported 3,117 deaths, attributed to ‘terrorist’ infiltration, but unofficial accounts and human rights organizations estimate that thousands more were killed in clashes with security forces. The crushing response sent society into shock and mourning, in an atmosphere of silence, bewilderment, anger and uncertainty about the future. Student protests, when universities reopened, were quickly quelled.
Politically, hard-liners are in charge. The moderate government of President Masoud Pezeshkian hasn’t delivered on any of its election promises, including avoiding war, negotiating with the U.S., lifting sanctions, improving the economic situation and removing internet censorship. The bloody events of January have further disillusioned and frustrated Pezeshkian’s supporters. As a result, Iran’s balance of power has shifted in favor of conservative political, military and security forces, continuing a trend that began after June 2025.
Gathering Threats
Iran’s sense of threat has increased significantly since mid-2025. Then, Tehran expected that renewed war would primarily target its nuclear facilities, missile capabilities and IRGC military bases. Now Trump has made it clear that he intends to destroy the regime itself and the capabilities that are integral to its defense and deterrence.
This confirms fears that Iran has harbored for weeks or months. It has signaled that it is prepared to use all of its available resources, including deployment of its most advanced new-generation missiles (including Fattah and the latest Khorramshahr-4), as well as to call on its regional allies in the ‘Axis of Resistance’.
Proxy military groups stayed out of the June 2025 war, apparently with Tehran’s assent. Now, however, they have begun issuing threats to widen the conflict:
The diverse and well-armed Iraqi factions, which are positioned to threaten U.S. assets in the Kurdistan region and Jordan, launched a new recruitment campaign. Kataib Hezbollah (which appears to have been an early target) told its fighters to prepare for a long war of attrition.Secretary General Naim Qassem of Lebanese Hezbollah—which still retains missiles capable of pressuring Israel’s ‘Iron Dome’ air defenses—delivered a speech on Jan. 26 in support of Khamenei, although this brought heavy pushback from the Beirut government.Yemen’s Huthis—which are more independent of Iran but also have far greater domestic leeway—threatened new attacks on Red Sea shipping, an area in which they have previously demonstrated marked success. Pressure on the Bab al-Mandab and Red Sea at the same time as on the Strait of Hormuz (from Iran itself) is a threatening scenario for global trade and oil prices.
Much of this rhetoric might have been intended for deterrence, which has now failed. However, at least some group members genuinely see Supreme Leader Ali Khamenei as their religious and spiritual leader and will answer the call to arms. Moreover, certain factions are so dependent on Iranian political, financial and military support that they may calculate a serious threat to the existence of Iran’s political system would also undermine their own long-term survival prospects.
War without limits?
This points to the likelihood of far-wider regional consequences. In an existential war, Iran’s conventional missiles, drones and naval assets could be complemented by proxy groups’ rockets, mortars and even suicide attacks. If Tehran’s aim is to show that the costs of prolonged war would be too high for Washington, then it has an incentive to strike early and hard. Already bases across the Gulf have been targeted, and some hit.
e principal metric of success, for Tehran, will be U.S. military fatalities—in order to create a domestic problem for Trump, particularly among the MAGA base who were promised an end to ‘forever wars’. Breaking through Israel’s missile defenses to cause significant deaths would also be a high priority.
This kind of conflict might also bring in a range of ‘softer’ and less well-defended targets than the nine U.S. military bases across the Middle East, which together hold an estimated 30,000-40,000 troops, as well as ‘Fortress Israel’. As seen from the Huthi Red Sea attacks, even a vague and alleged connection to the actual enemy may be sufficient when the aim is to establish a global deterrent. Commercial ships, US- or Israeli-linked businesses or cultural institutions, or a wide range of other vulnerable locations could be at risk. Iranian officials have also specifically threatened investments in the Gulf linked to the Trump Organization.
Iran has striven since 2023 to uphold the China-brokered detente with the Gulf Arab states, and it is notable that none of those states favor an attack on Iran—they are acutely aware of the potential for extended regional turbulence that undermines their own security. However, if Iran’s leadership believes it is facing a fight for survival, then the Gulf Arab states are targets, even beyond the U.S. bases. Closure of Hormuz through mining or an attempted naval blockade is possible, but Iran has other options to disrupt global energy markets. During Trump’s first term, it demonstrated a capacity to hit major Saudi oil facilities in Abqaiq. Production infrastructure could be a target as well as maritime chokepoints. So too soft targets such as desalination plants or the data centers that are integral to the region’s AI ambitions.
Oxford Analytica is a geopolitical risk analysis and advisory service owned by Barron’s parent company, Dow Jones.