The U.S. airstrikes on Iran have reached a critical juncture that will determine whether the conflict becomes a prolonged war or concludes quickly. President Donald Trump has set a minimum four-week timeline and mentioned negotiations, but Iran immediately rejected the offer. With oil prices surging 13% at market open before paring gains amid high volatility, a prolonged situation could disrupt not only financial markets but global supply chains, affecting the real economy.
In a video address on the 1st (local time), Trump said regarding the deaths of three U.S. service members, "We will avenge their deaths," adding that "attacks will continue until all objectives are achieved." In an interview with The New York Times, Trump stated, "I was thinking of attacking for 4 to 5 weeks," and "We have an enormous amount of ammunition." Regarding Iran's future, Trump presented two scenarios: a Venezuela-style model of ousting leaders and installing pro-American figures, or regime change by the Iranian people themselves.
In an interview with The Atlantic, Trump said, "Iran wanted to talk and I agreed. We will talk." The Wall Street Journal subsequently reported that Ali Larijani, Secretary of Iran's Supreme National Security Council and the new power broker, was seeking to resume negotiations through Oman. However, Larijani immediately denied this strongly, stating, "We will not negotiate with the United States."
The war is expanding beyond Iran and Israel to neighboring countries. Lebanese militant group Hezbollah struck Israel on the 2nd, and Israel conducted airstrikes across Lebanon. Leaders of Britain, Germany, and France issued a joint statement warning Iran they could take defensive measures if necessary against Iran's indiscriminate attacks on Middle Eastern nations. Iran also attacked eight Arab countries: the United Arab Emirates, Bahrain, Kuwait, Saudi Arabia, Iraq, Jordan, Oman, and Qatar. At least 9 people were killed near Jerusalem, and the Iranian Red Crescent announced at least 555 deaths within Iran.
Markets appeared to anticipate the Iran situation, finding stability at times but fluctuating with each new development. Brent crude and West Texas Intermediate (WTI) futures surged 13% immediately after opening, then pared gains to around 4%, before jumping back to around 8%. Japan's Nikkei 225 index fell 2.7% in early trading before reducing losses to close down 1.35%. Bloomberg noted, "Major shipping companies are suspending or reducing operations through the Strait of Hormuz and the Red Sea," adding that "a prolonged situation will cause repercussions across global supply chains."