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Military And Security Developments
Feb 26.
Key points
- Iranian retaliation would likely prioritise US military assets in Bahrain and Qatar; the scope of escalation would be determined by the scale of any US / Israeli strikes.
- Severe disruption to regional maritime trade would be almost certain, with heightened risks in the Strait of Hormuz and Red Sea threatening energy flows and global supply chains.
- Regional airspace closures would almost certainly follow strikes, significantly constraining mobility, delaying cargo and complicating evacuation planning.
- A sudden and sharp increase in energy market volatility, deteriorating investor confidence and pressure on tourism-dependent economies would be likely, with risks intensifying under prolonged hostilities.
Context
On 19 February, US President Donald Trump set a 10-15-day deadline for Iran to reach a nuclear deal, threatening that ‘really bad things’ would otherwise materialise. The threat came after a second round of indirect negotiations between the two states on 17 February, and amid a growing US military build-up in the region, including the deployment of two aircraft carriers. Tensions between the US and Iran have been rising since early January, following Iran’s violent suppression of large-scale domestic protests that began on 27 December 2025.
The increasing prospect of US strikes on Iran has raised concerns about the possible regional impact (particularly on Gulf states). On 14 January, a US official confirmed reports that personnel were evacuating the US’ al-Udeid air base in Qatar, the largest US air base in the region. The news has raised concerns of imminent armed escalation, as Iran targeted the base in late June 2025 in retaliation for previous US strikes. In late January, amid growing tensions and rising risks of military conflict, Saudi Arabia and the UAE announced that they would not allow the US to use their territories (including air and sea facilities) to conduct any military action against Iran.
This report discusses the likely regional impacts of Iran-US tensions materialising into armed conflict. For our different strike scenarios, please see Sibylline Middle East Crisis Update – Iran-US Special Edition – 11 February 2026. For our latest scenarios on the Iranian regime’s stability and the associated impact of US strikes, see Sibylline Special Report – 19 January 2026. Sibylline also conducts bi-weekly webinars discussing the latest developments in the Middle East Crisis; click here to register.
Forecast
Iranian retaliation is likely to prioritise US military installations and assets, particularly in Bahrain and Qatar
A limited US strike would likely prompt Iranian retaliation aimed at mitigating escalation. As such, limited Iranian retaliation would almost certainly target military assets and infrastructure while seeking to constrain damage and minimise loss of life. In this scenario, Iranian retaliation would likely be highly telegraphed and focus on US military assets in Bahrain and Qatar, as well as US naval vessels operating in regional waters. Limited Iranian strikes against US assets in Iraq and Syria would also remain a realistic possibility. However, pro-Iran Iraqi militias are unlikely to be involved at this stage, reflecting Tehran’s interest in maintaining escalation control and avoiding a broader regional conflict.
A significant US and Israeli strike campaign would likely alter both the intensity and geographic scope of Iranian retaliation. In this scenario, Iran is almost certain to target civilian and military sites within Israel. In addition to the assets outlined above, there is a realistic possibility that Iran would target US military installations in Jordan and Kuwait. There is also a realistic possibility that pro-Iran Iraqi militias would join the conflict and target US assets in Iraq, Jordan, Kuwait, and Syria. Proxy targeting of Israel would also remain a realistic possibility.
Significant US airstrikes would possibly also prompt Iran to target US assets in the UAE, particularly in the event of strikes against Iranian energy infrastructure and/or if the Iranian leadership perceives an existential threat to regime stability. However, such targeting would likely be aimed at coercive signalling rather than indiscriminate escalation in an attempt to encourage Gulf states to pressure the US to cease operations, not to target the civilian and government assets of those states directly (and thereby risk antagonising them). Iranian strikes against Saudi Arabia would remain unlikely unless Saudi territory is used to facilitate military action against Iran.
Significant disruption to regional commercial shipping would be almost certain, elevating supply chain risks, particularly for the energy sector
Severe disruption to maritime transit through regional waterways would likely follow escalating Iran-US hostilities. Iranian naval forces – including those of the Islamic Revolutionary Guard Corps (IRGC) – would likely harass commercial shipping, particularly US or Israeli-affiliated vessels, including attempted diversions into Iranian waters through coercive manoeuvres and boarding operations. Such activities would be particularly likely in the Strait of Hormuz and the Arabian Gulf. We assess that there would also be a realistic possibility of incidents extending into the Arabian Sea. In the event of a significant military Israel/US strike campaign, the blockade, closure or mining of the Strait of Hormuz would be a realistic possibility (see Scenarios 2 and 3 in Sibylline Middle East Crisis Update – Iran-US Special Edition – 11 February 2026).
In the event of significant or prolonged strikes, there is also a realistic possibility that the Iranian-backed Houthis would resume attacks on Israeli and US-affiliated commercial vessels in the Red Sea. Parallel disruption across the Strait of Hormuz and the Red Sea would compound routing constraints and increase operational strain. Reduced crew availability, vessel withdrawal from high-risk areas and sharply elevated war-risk premiums would likely materialise within the first several days of hostilities. Rerouting vessels around the Cape of Good Hope (South Africa) would extend delivery cycles by several weeks, tightening inventory buffers and increasing working capital requirements, though this risk is partly mitigated by the number of firms that have not yet resumed transit through the Red Sea. Energy shipments – including crude oil, refined products and LNG – would be particularly exposed to scheduling delays and contractual strain.
Disruption beyond several weeks would likely intensify the effects of second-order supply chain disruption. There is a realistic possibility that companies would increasingly pass higher transport and insurance costs down production chains, raising input prices across the construction and manufacturing sectors. Sustained disruption extending beyond several months would significantly elevate structural risks to trade flows for GCC economies, with implications for energy export schedules, refining throughput and regional industrial output.
- Iran-US: Breakthrough in negotiations is unlikely; risk of strikes remains elevated. Earlier on 26 February, US and Iranian envoys arrived in Geneva (Switzerland) for the third round of indirect talks over Iran’s nuclear programme, amid elevated tensions and a US military build-up in the Middle East region. Discussions are ongoing at the time of writing. Notably, the talks come hours after a statement from US Secretary of State Marco Rubio warning that Iran’s refusal to discuss its ballistic missile programme is a major issue. We assess that Iran is unlikely to offer major concessions regarding its nuclear program, ballistic missiles or support to regional proxies. Such maximalist negotiating positions will undermine the prospects for the imminent signature of a permanent, comprehensive US-Iran nuclear agreement. However, there is a realistic possibility that the US and Iran will instead focus on establishing a framework for further talks via an interim agreement. Such an agreement will possibly delay US strike action in the coming days, though the risk of strikes remains elevated.
Feb 25.
KEY DEVELOPMENTS
IRAN
- The US and Iran will engage in a third round of indirect negotiations on 26 February, though an imminent breakthrough remains unlikely.
- Concerns that Iran has resumed the development of its nuclear programme will compound the risk of US airstrikes in the coming days and weeks.
- Small-scale demonstrations associated with mourning rituals and larger-scale demonstrations at universities in Iran underscore sustained anti-government sentiment and the risk of an imminent crackdown.
ISRAEL
- The arrest of four ethnic-Arab Israeli citizens in connection with a planned small-arms attack on IDF soldiers in Karmiel (Northern district) highlights elevated radicalisation risks within ethnic-Arab Israeli communities.
PALESTINIAN TERRITORIES
- GAZA STRIP: A likely deadlock over Hamas’ disarmament will impede progress on the Peace Plan, despite recent troop and financial pledges at the inaugural meeting of the Board of Peace.
- WEST BANK: The increasing condemnation of Israel’s policies vis-à-vis the West Bank will likely trigger broader scrutiny of Israel and Israel-linked entities in the coming months.
IRAN
- The US and Iran will engage in a third round of indirect negotiations on 26 February, though an imminent breakthrough remains unlikely. Despite continued talks, both countries have maintained hardline negotiating positions vis-à-vis Iran’s uranium enrichment programme. On 19 February, US President Donald Trump stated that he would decide on potential military action targeting Iran within 10 days (i.e. 1 March). US officials have warned that they are considering limited strikes if Iran does not ‘capitulate’ during negotiations; they have also reiterated their opposition to any enrichment activity taking place within Iran. During the third round of talks, the US will likely attempt to leverage Iran’s concerns regarding military intervention and threats to government stability to secure major concessions. By contrast, Iran likely aims to leverage US concerns regarding the prospects for a protracted regional conflict to secure more leniency and sanctions relief commitments. Such maximalist negotiating positions will undermine prospects for the imminent signature of a permanent, comprehensive US-Iran nuclear agreement. However, there is a realistic possibility that the US and Iran will instead focus on establishing a framework for further talks via an interim agreement, potentially delaying strike action and the associated regional fallout. We assess that the failure to secure an interim or permanent agreement following talks on 26 February will substantially increase the risk of US airstrikes targeting Iran (for scenario analysis, see Sibylline Middle East Crisis Update – 11 February 2026). US airstrikes would almost certainly trigger substantial price volatility on international energy markets, while associated airspace closures would almost certainly disrupt regional and transcontinental travel. The scale of Iran’s retaliation (which would likely prioritise US military assets in the Gulf region, including in Bahrain, Qatar and the Red Sea) will almost certainly depend on the scale, intensity and targeting profile of the US’ prior airstrikes. Consequently, a limited US airstrike campaign will moderate risks of regional escalation and critical operational disruption.
- Concerns that Iran has resumed the development of its nuclear programme will compound the risk of US airstrikes in the coming days and weeks. On 18 February, the International Atomic Energy Agency (IAEA)’s Director General Rafael Grossi stated that the ‘majority’ of Iran’s nuclear equipment and material (including its uranium stockpiles) remains within the country. However, the Iranian authorities have restricted the IAEA’s monitoring capacity since the Iran-Israel war and have prevented inspectors from accessing their facilities, undermining the IAEA’s ability to verify the location and status of stockpiles at the time of writing. Given long-standing tensions with the IAEA, the Iranian authorities are highly unlikely to agree to broad or rigorous monitoring measures amid ongoing negotiations with the US, exacerbating bilateral tensions (see above). During the State of the Union address on 24 February, US President Donald Trump also alleged that Iran had ‘restarted’ its nuclear programme in recent months and is attempting to develop missiles capable of reaching the US. If the US and Iran fail to reach an agreement in the upcoming talks, further allegations of this kind are likely to signal the imminent approval of US airstrikes targeting Iran.
- Small-scale demonstrations associated with mourning rituals and larger-scale demonstrations at universities in Iran underscore sustained anti-government sentiment and the risk of an imminent crackdown. Since 22 February, thousands of students have participated in repeated anti-government demonstrations at universities in Isfahan (Isfahan province), Mashhad (Razavi Khorasan province) and the capital Tehran. Protests have triggered low-intensity clashes between the security forces, anti-government protesters and pro-government counter-protesters. Clashes have resulted in numerous injuries (though no verified casualties at the time of writing). Further protests are highly likely on university campuses in major cities in the coming days, including Isfahan, Kermanshah (Kermanshah province), Mashhad, Shiraz (Fars province) and Tehran. On 24 February, international media also reported that a revolutionary court in Tehran issued a death sentence to an individual detained during anti-government protests in January. In the coming days, reports of further sentences or imminent executions will likely sustain protest attendance, particularly in Tehran. The security forces will almost certainly continue employing heavy-handed techniques to disperse and deter anti-government gatherings, increasing the risk of intensifying clashes and further demonstrations thereafter. The security forces will likely enact increasingly stringent measures to secure university and school facilities to deter participation, possibly including water-based chemical attacks. Clashes between the security forces and protesters will also likely exacerbate tensions with the US, increasing the risk of airstrikes, particularly those targeting security force positions, communications infrastructure and possibly detention facilities (to aid jail breaks) in the coming days and weeks (see above).
ISRAEL
- The arrest of four ethnic-Arab Israeli citizens in connection with a planned small-arms attack on IDF soldiers in Karmiel (Northern district) highlights elevated radicalisation risks within ethnic-Arab Israeli communities. On 23 February, the Israeli police and Shin Bet announced the arrest of four individuals, two of whom are under 18 years old. According to local news outlets, the four suspects were influenced by reports of the war in Gaza, Islamic State (IS) material and the July 2024 stabbing attack in Karmiel (see Sibylline Israel-Hamas War Update – 4 July 2024). The arrests highlight the persistently elevated risks of radicalisation among the country’s ethnic-Arab Israeli population, particularly in northern Israel. This trend will sustain elevated attack risks over the coming months. While such attacks are likely to target Israeli security personnel primarily, we assess that the targeting of civilians remains a realistic possibility, driving elevated crossfire risks for bystanders in crowded areas such as shopping centres, as well in religious sites in the coming months.
PALESTINIAN TERRITORIES
- GAZA STRIP: A likely deadlock over Hamas’ disarmament will impede progress on the Peace Plan, despite recent troop and financial pledges at the inaugural meeting of the Board of Peace. On 19 February, Trump announced pledges totalling USD 17 bn for emergency relief and the reconstruction of Gaza during the Board of Peace’s inaugural meeting in the US capital Washington DC. Trump also revealed that Albania, Kazakhstan, Kosovo and Morocco (in addition to Indonesia) have agreed to contribute thousands of troops to the International Stabilization Force (ISF). However, the countries have made their contributions contingent on the ISF’s tasks being limited to activities such as border patrol and securing humanitarian aid. As such, responsibility for ensuring Hamas’ disarmament will likely fall primarily on a yet-to-be-established Palestinian police force. Israel has previously conditioned the withdrawal of its forces from Gaza on the disarmament of Hamas, as stipulated within the second phase of the Peace Plan. By contrast, Hamas has conditioned its disarmament on Israel’s withdrawal from Gaza. We assess that a deadlock over Hamas’ disarmament is likely. This will exacerbate the ceasefire’s fragility, driving ceasefire violations and prolonging armed conflict risks in Gaza over the coming months.
- WEST BANK: The increasing condemnation of Israel’s policies vis-à-vis the West Bank will likely trigger broader scrutiny of Israel and Israel-linked entities in the coming months. On 23 February, 20 states including France, Egypt, Jordan, Ireland, Spain and Turkey issued a joint declaration condemning Israel’s efforts to advance ‘de facto annexation’ in the West Bank. The declaration characterises proliferating settlement activity (including the approval of the E1 settlement to the east of Jerusalem) and efforts to establish a land settlement procedure as unlawful, underscoring rising regional tensions vis-à-vis Israel’s policies in the West Bank (see Sibylline Middle East Crisis Update – 18 February 2026). In the coming months, we assess that settlement expansion, violence targeting Palestinian communities and efforts to broaden Israel’s administrative control of the West Bank will likely trigger increasing international scrutiny of Israel and Israeli settlers. States such as Canada, France and the UK will possibly move to expand sanctions targeting extremist settlers and associated entities, increasing compliance concerns in Israel’s finance, construction and agricultural sectors. Israel’s trade partners will also possibly adopt measures initiating reviews of arms export licenses or restricting trade with settlements and firms active in the West Bank, increasing the risk of supply chain disruption. Firms operating in Israel, particularly those providing services to settlements or purchasing goods from settler-linked entities, will face increasing risks of targeted pro-Palestine activism, compounding reputational concerns and corporate governance risks.
- ISRAEL-LEBANON: The evacuation of staff from the US embassy in Beirut underscores high risks of armed conflict resumption between LH and Israel following possible US-Israel strikes against Iran. The order was issued on 23 February and directed at non-essential government personnel and eligible family members; travel within Lebanon for remaining embassy staff will be restricted without prior authorisation. The embassy has suspended routine consular services and encouraged US nationals in Lebanon to depart, echoing the State Department’s travel advisory reiterating that US citizens should not travel to Lebanon. These measures come amid the US forces’ ongoing build-up in the region, heightened US-Iran tensions and the deadlock in their bilateral talks. Nevertheless, in the event of a large-scale US military campaign targeting Iran, we assess that LH is unlikely to attack US assets in Lebanon, in order to avoid US retaliation and dragging Lebanon into a larger conflict. However, there is a realistic possibility that a protracted joint US-Israeli strike targeting Iran will prompt LH to resume its missile and drone attacks against Israel. This would highly likely prompt a robust Israeli response, including IDF ground operations deeper into Lebanon’s South and Nabatieh governates and possible strikes on Beirut. Consequently, further pre-emptive Israeli strikes across Lebanon against LH’s chain of command, as well as drone and missile operators, are likely in the coming days, similar to the IDF’s 21 February strikes in Baalbek-Hermel governorate.
- IRAQ-US: The Iran-backed militia Kata’ib Hezbollah (KH)’s warning to Kurdish communities to not get involved in a US-Iran conflict underscores Iraq’s vulnerability to regional tensions. On 23 February, the head of KH’s Security Bureau, Abu Ali al-Askari, issued a statement warning the Kurdish authorities in Iraq to not get involved in any potential US-Iran conflict. Al-Askari claimed that the US’ military activity is expanding in the Kurdistan Region of Iraq (KRI) in a manner that he alleges can be used for future land operations against Iran. However, we assess that the US is unlikely to use KRI to launch land or air operations into Iranian territory, given the region’s proximity to Iran and the logistical difficulties to defend it effectively against any retaliation. Nevertheless, there is a realistic possibility that Iran-backed militias in Iraq (including KH) will target US forces in KRI with missiles and drones in the event of US strikes (including limited ones) against Iran. The primary targets for such action will likely include Erbil International Airport (EBL; Erbil governorate), disrupting transit and driving significant physical security risks in the city of Erbil and its periphery during any such conflict. These risks will remain elevated despite a likely augmented posture and reinforcement of US troops in Erbil and around strategic facilities (such as oil fields) in the coming days.
- Iran: Student protests are likely to continue in coming days, elevating personnel security risks. On 24 February, anti-government demonstrations at universities across Iran continued for a fourth consecutive day, notably in Isfahan (Isfahan province), Mashhad (Razavi Khorasan province) and the capital Tehran. Several clashes, including running battles and fistfights, broke out between the security forces, protesters and pro-regime counter-protesters. Reportedly, demonstrations have expanded beyond universities to schools, underscoring widening participation amid growing youth disillusionment with the regime. As demonstrations grow, reports on 24 February stated that a court in Tehran issued a death sentence for an attendee of the January anti-government protests; this will likely increase protest attendance. The proliferation of protests on university campuses and schools will elevate the risk of domestic unrest in Iran in the coming days. Nevertheless, government restrictions on communications will possibly moderate demonstrations’ turnout while also disrupting evacuation procedures, logistics operations and supply chains. In the event of wider protests, the security forces are likely to employ baton charges and use tear gas, rubber bullets and live ammunition to disperse protesters, increasing threats to life for personnel near large gatherings.
- Iraq-US: Militia warning to Kurdish communities underscores security instability amid regional tensions. On 23 February, the head of the Security Bureau of the Iran-backed militia Kata’ib Hezbollah (KH), Abu Ali al‑Askari, issued a statement warning Kurdish communities in Iraq to not get involved in any potential US-Iran conflict. Al-Askari claimed that the US’ military activity is expanding in the Kurdistan Region of Iraq (KRI) in a manner that can be used for future land operations against Iran. However, we assess that the US is unlikely to use KRI territory to launch land or air operations into Iranian territory. Regardless, there is a realistic possibility that Iran-backed militias in Iraq (including KH) will target US forces in KRI with missiles and drones in the event of US strikes (including limited ones) against Iran. The primary targets for such action will likely include Erbil International Airport (EBL; Erbil governorate), disrupting transit and driving significant physical security risks in the city of Erbil and its periphery during any such conflict. These risks will remain elevated despite a likely augmented posture and reinforcement of US troops in Erbil and around strategic facilities (such as oil fields) in the coming days.
Feb 24.
- Lebanon: Evacuation of US embassy staff underscores armed conflict risks between LH, Israel. On 23 February, the US Department of State withdrew non-essential government personnel and eligible family members from the US embassy in the Lebanese capital Beirut. On the same day, the State Department also updated its travel advisory, reiterating that US citizens should not travel to Lebanon. The Department has also restricted travel within Lebanon for the remaining embassy staff, permitting travel only with prior authorisation. The evacuation underscores the sustained risk of armed conflict escalation amid the US forces’ build-up in the region and heightened tensions between Washington DC and Tehran. We assess that in the event of a large-scale military campaign against Iran, there is a realistic possibility that Lebanese Hizballah (LH) will target US and Israeli assets, particularly those based in Israel. Such action would highly likely prompt a robust Israeli response, including ground operations by the Israel Defense Forces (IDF) deeper into Lebanon and possible strikes targeting Beirut. Armed escalation will significantly elevate security risks in southern Lebanon, as well as in Beirut to a lesser extent.
- Israel-Palestinian Territories: New government measures will elevate sanctions, reputational risks. On 23 February, the foreign ministers of several countries (including Brazil, Denmark, France, Norway, Saudi Arabia and Turkey) issued a joint statement condemning the Israeli government’s recent decisions that expand Israeli administrative control over the West Bank and facilitate the purchase of land for settlers. The ministers claim that these decisions amount to a de facto annexation of the West Bank, in violation of international law. Also on 23 February, Israeli settlers vandalised and set fire to a mosque near Nablus (Nablus governorate), underscoring a broader rise in settler violence in the West Bank. The expansion of settlements under the new measures will almost certainly exacerbate ethno-religious tensions, increase the frequency of similar incidents and escalate intercommunal clashes, driving personnel exposure to violence. We assess that more countries are likely to follow suit and condemn these measures, driving tensions between Israel and its international partners. In turn, some states will possibly issue further sanctions targeting Israeli settlers and associated entities, elevating sanctions exposure risks and reputational concerns for businesses, particularly in the financial, agricultural and construction sectors
Feb 23.
- Palestinian Territories: Likely deadlock over disarmament will prolong conflict risks. On 19 February, US President Donald Trump pledged USD 17 bn in emergency relief and for the reconstruction of Gaza during the inaugural meeting of the Board of Peace in Washington DC. Trump also revealed that Albania, Indonesia, Kazakhstan, Kosovo and Morocco agreed to contribute thousands of troops to the International Stabilisation Force (ISF). However, the countries made their contributions contingent on the ISF’s tasks being limited to activities such as border patrol and securing humanitarian aid. As such, responsibility for ensuring Hamas’ disarmament would fall on a yet-to-be-established Palestinian police force. Israel has previously conditioned the withdrawal of its forces from Gaza on the disarmament of Hamas, as stipulated within the second phase of the Peace Plan. By contrast, Hamas has conditioned its disarmament on the withdrawal of Israel from Gaza. We assess that a deadlock over Hamas’ disarmament is likely. This will exacerbate the ceasefire’s fragility, driving ceasefire violations and prolonging armed conflict in Gaza over the coming months.
- Turkey: Reporter arrest highlights repressive press environment, legal exposure for media firms. On 19 February, the Turkish authorities arrested Deutsche Welle (DW) journalist Alican Uludağ in the capital Ankara for ‘disseminating misleading information’ and ‘insulting the president’. His arrest was allegedly linked to online criticism of Turkish government measures that led to the release of suspected Islamic State (IS) militants. DW has called the accusations baseless. The move comes amid a wider crackdown on press freedoms in Turkey, including the 2025 arrests of several journalists from Halk TV and the seizure of the conglomerate Can Holding, which includes the major media outlets Bloomberg HT, Habertürk and Show TV. We assess that the authorities will likely continue to target journalists and media outlets over the next six to 12 months, increasing legal exposure for associated businesses. This will heighten the risk of arbitrary detention for individuals working in the press sector and lead to self-censorship due to fear of arrest. Turkish media firms and international media outlets operating in Turkey will face increased compliance and regulatory risks in the coming months, possibly undercutting revenues. (Source: Sibylline)
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