Intelligence reports indicate that Iran’s hard-line leaders have made a strategic shift to prepare their forces for a potential expansion of the ongoing conflict with the United States. The conflict, active since February 2026, has seen various military actions including strikes on shipping and regional targets. Iran’s preparations, including missiles, drones, and militia coordination points, suggest a potential escalation beyond mere deterrence. This situation is contributing to market participants’ perception of a decreased likelihood for a US-Iran deal on reconstruction funding in 2026.
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