How could the Iran-Israel situation escalate further?

Quick and dirty rundown

The background should be well-known by all through the mainstream media, but to reiterate just the most recent aspects of it:

(but for a proper in-depth background, there are worse places to start than Robert Fisk’s 2005 book The Great War for Civilization)

Iran is implicated as a factor in Hamas’ last year escalation of the latter group’s military response against Israel. Tensions have accordingly intensified during the last six months, particularly through Israel’s arguably genocidal response, and the massive civilian death toll, inciting further actions from Iranian allies or associated groups such as the Houthis.

With Israel’s April 1 attack on the Iranian embassy in Damascus, the situation has moved much closer to a situation of open war between Iran and Israel, and yesterday’s Iranian response can be construed as the first real salvo in that conflict.

Now we’re no longer dealing with proxies or Iran-supported rebel groups in Lebanon or Syria. Iran has launched combat drones and ballistic missiles from within its own territory. In response to an event like this, Israel promised a “powerful response”, i.e. if a retaliatory attack should come from within Iranian territory, so one should expect the situation to rapidly escalate, at least to an extent, in the short term.

Iran also now openly attacks Israeli and Israel-linked ships in the Red Sea, exerting significant further pressure on international trade and oil flows. The difference between Houthi irregular forces launching drones, and IRGC troops openly boarding Portugese-flagged (Israel-linked) vessels can hardly be overstated, and stakes are suddenly very high.

If the situation escalates further, the Iranian Strait of Hormuz is immediately exposed (where much more of the international oil flow passes). Almost a quarter of all petroleum consumed globally passes through this tiny strait, and around a third of all natural gas, so the risk of a widespread and catastrophic economic fallout of this conflict just became much more serious.

Over the last decades, Iran has built up a significant military capacity with the explicit purpose of strategically blocking parts of the petroleum flow through these waters. Iran is bound to have many levers of precise influence here, quite apart from a wholesale blockade that nobody would benefit from. Such levers could likely be used to target prices in regional markets in a sort of hybrid-conventional-economic warfare, such as through suppressing shipping connected only to certain state actors and organizations.

This state of affairs serves as both a significant deterrent from further escalation, as well as a reason for an increasingly desperate Israeli regime to push the envelope as much as it can.

Nobody wants a new energy crisis on top of a historically unstable global financial system, and if Israel gives the West a choice between either decisive collective action in support of their Gaza operation, coupled with an effective deterrent against its Iranian adversary, or the slow descent into a regional war with an uncertain outcome, Gaza will certainly get thrown under the bus.

This also ties into an argument towards Israel attacking the Iranian embassy to goad Iran into retaliating forcefully, creating a pretext for US involvement.

But right now, wagons are being circled all across the region.

Turkey has, in a move towards de-escalation, prohibited the US from using the country's airspace for a possible conflict with Iran (or for aerial support for Israel in such a conflict), thus taking a stronger and perhaps paradoxical position (as a NATO country). Turkey has also begun sanctioning Israel with the purpose of promoting a cease-fire, something which is regarded by Israel as the “opening of a trade war”, which in turn has prompted Israel to respond in kind with export bans.

Significantly, Egypt has not condemned Iran's response, and is neither particularly interested in taking in millions of refugees from an Israeli ethnic cleansing of Palestine, especially given Egypt’s already substandard infrastructure and overcrowding.

Meanwhile, the Israel-Hezbollah conflict is proceeding around the Lebanese border to the north, with more than 4 400 rocket attacks between the two parties taking place since October 2023.

Will Hezbollah follow up on the Iranian retaliation with a further escalation in hostilities, exploiting the many potential openings that Iran’s attack may create? This is indeed possible, not least since Israel’s capabilities of deterrence are now weakened for many reasons, both through the moderately successful Iranian retaliation and the clearly stated unwillingness by the US to support further Israeli military action.

A ramping-up of hostilities is possibly indicated by reports from Hezbollah’s own news site.

US think-tanks connected to military intelligence particularly emphasize that the loss of Israeli deterrence renders the likelihood of an all-out war with Hezbollah much more likely. One aspect of this situation is the increasing perception in the Israeli power structure that a war in the long run is inevitable, and that there’s no sense in sitting around waiting for another October-style attack on Israeli territory before one attempts to push back Hezbollah from the north. A situation of relative weakness such as the one Israel now finds itself in thus serves as a pretext but also arguably presents a strategic necessity for offensive action.

A rapid further escalation seems likely, and risks, in addition to a major war in the long run, also a critical energy situation in the near term, with significant economic pressures to follow.