Iran is a Middle Eastern country whose nuclear programme has been a focal point of international diplomacy. America has labelled it a state sponsor of terrorism since 1984.
Half of all Iranian-Americans live in California. Nearly a third—about 230,000 people—are in the Los Angeles area, concentrated in Westwood and Beverly Hills, an area known as "Tehrangeles". Many arrived after the 1979 revolution, particularly Iranian Jews. These first émigrés were often wealthy and educated. The diaspora is multi-ethnic, multi-religious and multi-generational.
In 2015 Iran signed the Joint Comprehensive Plan of Action (JCPOA) with seven world powers, which allowed it to enrich uranium to 3.67%. Donald Trump withdrew America from the deal three years later. Since then Iran has amassed a big stockpile of enriched uranium and thousands of advanced centrifuges. The JCPOA allowed Iran to stockpile no more than 300kg of uranium enriched to 3.67% purity; by May 2025 the IAEA said Iran had accumulated 8,413kg, almost 409kg of it refined to 60%, a short hop from weapons-grade.
In April 2025 Iran entered nuclear talks with America, which by late April had reached their fourth round. Iran suspended the talks after Pete Hegseth, America's secretary of defence, warned that Iran would "pay" for its "lethal support" of the Houthis, but quickly declared it would resume after Donald Trump paused his bombing campaign in Yemen on May 6th. A draft agreement is said to be circulating that could see Iran and America restore diplomatic relations after 45 years, with Iran permitted to enrich uranium to low levels in perpetuity. Abbas Araghchi, Iran's foreign minister, met Steve Witkoff, America's Middle East envoy, at the Omani embassy in Rome on April 19th. Oman's foreign minister, Badr Albusaidi, mediated the talks. Unlike the JCPOA, which involved seven world powers, these talks are bilateral. Iran insists that a zero-enrichment deal is not up for discussion. It wants any new agreement to be a Senate-confirmed treaty and seeks guarantees that a future president will not abandon it again. Supreme leader Ali Khamenei, who was a sceptic during the JCPOA negotiations, is now the talks' overseer and champion. The hope of a deal has fostered rare economic confidence: the rial rose 25% against the dollar since the talks began.
As of late November 2025 Abbas Araghchi, Iran's foreign minister, says enrichment "has now stopped", though whether owing to the bombing or out of prudence he does not say. Rafael Grossi, the head of the UN's nuclear agency, said in October 2025 that Iran no longer appeared to be enriching any uranium. A third round of American-Iranian talks was scheduled for February 26th 2026; Steve Witkoff, Trump's diplomatic envoy, said Iran could be "a week away" from enriching uranium to weapons-grade, contradicting Trump's own claim that Iran's programme had been "blown to smithereens". Western spies suspect Iran managed to spirit out enough fissile material to make at least one nuclear device before the June 2025 strikes. The regime has barred UN inspectors from visiting the bombed nuclear sites, where Araghchi says the stockpile lies buried. Iran may also have undetected enrichment facilities.
Iran has proposed keeping some enriched uranium and advanced centrifuges in-country under UN supervision as leverage against American withdrawal. It also wants economic assurances beyond mere sanctions relief. In 2016, the first full year after the JCPOA was signed, Iran's foreign direct investment inflows were just 0.7% of GDP, up from 0.5% in 2015.
Araghchi has said Iran wants to build 19 nuclear reactors and would invite American firms to bid, describing "tens of billions of dollars in potential contracts". There are only about 65 nuclear reactors being built around the world.
Iran's enrichment programme is spread across several sites. Natanz, 300km south of Tehran, housed an underground enrichment plant with 14,000 centrifuges. Fordow, near the city of Qom, is buried half a mile underground and is extremely difficult to destroy with conventional bombs. A third facility, Mt Kolang Gaz La, south of Natanz, may be even more deeply buried. Isfahan hosts a uranium-conversion facility and a plant making fuel-plates, which initiate the implosion of a bomb's core. Parchin was used to simulate implosions, and Arak contains a reactor. The SPND is the agency that led Iran's nuclear-weapons work. Iran had enriched enough uranium to 60% purity to make ten bombs; weapons-grade requires 90% purity, which could in theory be achieved in three days using the centrifuges at Fordow.
In March 2025 Tulsi Gabbard, America's intelligence chief, said that Khamenei had not reauthorised the weapons programme he suspended in 2003. Khamenei has a fatwa against nuclear weapons.
On June 13th 2025 Israel launched waves of aircraft to strike Iran's nuclear installations at Natanz, as well as officials associated with the weapons programme. The strikes killed the top echelons of the Iranian armed forces, including Mohamad Bagheri, the chief of staff, and Amir Ali Hajizadeh, the air-force chief. At least 14 nuclear scientists were also killed. Iran responded on the same day by launching over 100 drones and ballistic missiles against Israel. Israel named the operation "Rising Lion".
The IAEA's director-general, Rafael Grossi, said all 14,000 centrifuges at Natanz were "severely damaged if not destroyed altogether". Israel also bombed the SPND headquarters in Tehran, centrifuge-component factories, and facilities at Isfahan, Parchin and Arak. But Fordow appeared unscathed, and the deeper Mt Kolang Gaz La site also appeared untouched. Iran claimed it had moved equipment and nuclear material out of Natanz before the strikes. Grossi said he could no longer confirm the location of Iran's uranium stockpile. Iran declared it had stopped co-operating with the IAEA.
Binyamin Netanyahu said Iran's talks with America had been a smokescreen behind which scientists were pressing rapidly ahead. Donald Trump endorsed that view but continued to call for a return to the negotiating table. He called for Tehran to "immediately evacuate" and demanded Iran's "unconditional surrender". According to Reuters, Trump vetoed an Israeli plan to kill supreme leader Ali Khamenei, declaring political leaders off-limits unless Iran attacked American targets. Israel previously attacked nuclear-weapons programmes in Iraq in 1981 and Syria in 2007, both successfully, but Iran's effort is far more advanced and dispersed.
On June 22nd America launched "Operation Midnight Hammer", the largest-ever strike by B-2 stealth bombers and the first combat use of the GBU-57 "massive ordnance penetrator", America's biggest bunker-buster bomb. More than 125 military aircraft took part. Seven B-2s flew east from Whiteman air-force base in Missouri on 37-hour round trips, dropping 14 GBU-57s on Natanz and especially Fordow; decoy planes flew west over the Pacific to confuse watchers. Dozens of Tomahawk cruise missiles, fired from submarines, struck Isfahan. The GBU-57 can burrow through 60 metres of ordinary concrete, though less through reinforced concrete; repeatedly striking the same spot allows deeper penetration.
The IAEA estimated that Iran had 400kg of uranium enriched to 60% purity before the strikes—enough for ten bombs. David Albright, a former IAEA inspector who leads the Institute for Science and International Security in Washington, estimated that Iran lost close to 20,000 centrifuges at Natanz and Fordow, creating a "major bottleneck" in any renewed effort to build a bomb. However, the Defence Intelligence Agency issued a "low-confidence" assessment, based solely on satellite images and intercepted communications, concluding that the strikes set Iran's nuclear programme back by months rather than years, and that much of Iran's enriched uranium had been moved before the attacks. Iran threatened to withdraw from the Nuclear Non-Proliferation Treaty.
Fordow had been a secret enrichment project, revealed by Western countries in 2009.
Before the war Iran was thought to have around 2,000 ballistic missiles with the range to hit Israel. During the first week it fired around 400; Israel said it destroyed a roughly equal number in air strikes, as well as more than 120 of Iran's approximately 360 mobile launchers.
On June 23rd, the 12th day of the war, Donald Trump announced a ceasefire on social media, catching both Israel and Iran off-guard. Iran had responded to the American strikes with a largely symbolic barrage of missiles at al-Udeid air base in Qatar, giving plenty of advance warning; no one was hurt. Trump told Netanyahu he would announce the ceasefire; having enlisted American help, Netanyahu was in no position to refuse. Qatar mediated with Iran. Trump declared on June 25th that America and Iran would meet for talks "next week".
During the 12-day war Iran fired 532 ballistic missiles at Israel; just 31 hit populated areas, killing 28 people. Israel conducted roughly 100 missions a day. More than 600 people were killed in Iran, including many civilians. Iran rounded up hundreds of alleged Israeli spies; at least six were executed. Nicholas Miller, a non-proliferation expert at Dartmouth College, noted that the Iranian nuclear programme was far more extensive and dispersed than Iraq's or Syria's, which Israel bombed in 1981 and 2007 respectively.
Since the ceasefire on June 24th 2025, Khamenei has faded from public life. He appears only rarely and his once-lengthy sermons are brief. To appeal to a population disenchanted with clerical rule, he has dressed his theocracy in nationalist clothes: at an Ashura celebration on July 5th he ordered a cantor to drop his incantations and sing Ey Iran, a patriotic anthem that was popular before the 1979 revolution and had since been suppressed. He has played down Shia saints and puffed up Iran's pre-Islamic past. New billboards in cities give ancient Persian myths modern themes. The regime has turned a blind eye to a new crop of reality shows, including a wildly popular Persian version of "Love Island". In parts of Tehran, headscarves and long coats for women feel like a relic of the past. But these concessions are designed to reduce the demand for political change, not herald its coming. Executions are up.
The IRGC is using the continued threat from Israel to justify its hold on power. Israel's evident infiltration of the Guards' ranks has spread paranoia and complicated co-ordination. The IRGC's extensive business interests and unbridled corruption mean some expect it to fragment into a hotch-potch of decentralised mafias.
Two former presidents, Mahmoud Ahmadinejad and Hassan Rouhani, are plotting comebacks, both commanding a larger popular base than Pezeshkian. Rouhani is said to have been placed under house arrest; his allies are subject to travel bans. Ali Larijani, a former speaker of parliament, led a delegation to Moscow that met Vladimir Putin, sidelining the president. Mir Hossein Moussavi, a former prime minister under house arrest for 15 years, released a petition on July 11th calling for a new constitution, signed by hundreds of intellectuals.
Parliamentary hawks impeached the doveish finance minister, Abdolnaser Hemmati, in November 2025. They will not necessarily scupper a deal with America, but resist an end to Iran's nuclear programme or anything that smacks of normalisation with Israel.
Iran has downsized its ambitions from regional domination to regime survival. Abbas Araghchi, Iran's foreign minister, says the country is ready to resume nuclear talks and may even consider a non-aggression pact with Israel. Iran is already trying to rearm Hizbullah in Lebanon, and the IDF worries it may start getting proxies in Iraq to launch missiles at Israel.
Iran's Gulf islands have long served as a permissive periphery. After the Iran-Iraq war, the clerics turned Kish into a free zone, with malls that aspired to rival Dubai's. While music on the mainland was all but banned and vigilantes slapped the faces of women wearing lipstick, the islands offered a respite: men in shorts, women without veils. Each island has its own stamp: Hormuz has a reputation as Iran's Bali, Qeshm as its Mykonos, Kish as a local Saint-Tropez. In December 2025 5,000 people, men and women, ran in a marathon on Kish. The Aga Khan gave an architectural prize to an alternative-tourism project in Hormuz modelled on dome-topped water-storage towers. The Dutch and the British were both drawn to these shores, but both were expelled—the first by local sheikhs, the latter in the 1930s by the last shah's father.
Six years of drought (as of late 2025) are intensifying Iran's economic malaise. Reservoirs surrounding Tehran are drying up and the peaks above the capital are bare of snow. In Bushehr, a big southern port, the taps have run dry. Masoud Pezeshkian, the president, has decreed that rice should be grown in only five provinces, not the usual 17.
Agriculture provides a living for 23m Iranians and 80% of their food, and accounts for a fifth of non-oil exports. The government subsidises water, fertilisers and energy until they are virtually free, and bankrolls farmers so they can afford technology such as hydroponics to grow high-value produce. Greenhouse cultivation has more than tripled in area since the early 2010s. Much of its modern irrigation equipment comes indirectly from Israel, a leader in the field, usually arriving as part of packages provided by companies based in friendlier countries such as the Netherlands. A growing share of the equipment has also come from China and Russia.
Iran's farm exports are one of the few ways the country can obtain scarce foreign currency. Unlike oil, which is pumped by a state-owned monopoly, the country's vegetables are produced by 36,000 small growers. Output is bundled and shipped from Bandar Lengeh in the south to Sharjah in the UAE, a six-hour crossing. Iran supplies nine out of ten cauliflowers, tomatoes and watermelons imported by the UAE, a near-monopoly built in just a few years. It dominates the market for 15 commodities there, from aubergines to melons. Iran made perhaps $4bn-5bn from food exports in 2024. Much of this trade relies on hundi, an informal payment system run by small entities across Dubai: dirhams collected from food importers are passed to exporters of appliances, auto parts and machinery that Iran needs, so that dirhams need never be exchanged for rials.
Iranian produce is frequently repackaged in the UAE to disguise its origin before being re-exported across the Gulf, including to Saudi Arabia, which blocks fruit imports from Iran. Traders re-use paperwork issued for legitimate shipments from countries such as Italy and Spain.
In 2015 Iran's GDP was on a par with that of Turkey and Saudi Arabia. It is now barely a third their size. Six in ten working-age people are unemployed. Prices have risen by around 35% in the past year. Some 18% of the population lives below the World Bank's poverty threshold; a third live below the government's own poverty line of $400 a month. Between 2018 and 2022 income per person shrank by almost a fifth. Teachers typically earn less than $250 a month, a fraction of their salaries before the 1979 revolution. Despite exporting gas and oil, Iranian officials have had to burn mazut, a low-grade refining byproduct, to keep the lights on. Power plants have taken to burning cheap, tarry oil instead of gas, hugely exacerbating air pollution. The economy is set to shrink by 1.6% over the next 12 months, according to the World Bank. Not a single economic target from the government's 20-year plan of 2005 has been met.
Iran has the world's third-largest reserves of natural gas, yet it suffered a summer of blackouts in 2025. Oil production is currently around 3.25m barrels a day, and has never again come close to the 6m b/d achieved under the shah in the late 1970s. Iran exports about 1.7m-1.8m barrels a day of crude, equivalent to nearly 2% of global demand; including refined products, total exports reach 2.4m-2.8m bpd. About 90% of crude shipments depart from Kharg Island in the Persian Gulf, pumped in by pipeline. The island has an airstrip. Jimmy Carter and Ronald Reagan both considered invading Kharg; Saddam Hussein bombed it during the Iran-Iraq war. Iran has begun exporting smaller volumes from Jask, on the Gulf of Oman, as an alternative to Kharg; the smaller Lavan and Sirri terminals also serve as backups. Iran's outlying islands—Abu Musa and Greater and Lesser Tunb—sit in the Persian Gulf near the strait. In 2018, the last time Iran allowed the IMF to inspect its finances, the country exported $46bn of oil, counting for about half its total exports. American officials think the share is closer to a third today.
The UAE was the source of nearly a third of Iranian imports in 2025. Iran's domestic payment system, Shetab, is linked to Russia's Mir system, allowing banks to make transactions without worrying about extra sanctions. Oil and arms payments are mostly processed through China, which also stores the central bank's reserves.
Iron and steel are among Iran's main non-oil exports, with revenue of almost $7bn a year. The plants also supply a range of domestic industries, from cars to construction. Iran's two biggest steel mills were closed by air strikes on April 2nd 2026, knocking out nearly 70% of production capacity.
Iran has no external debt; its overseas financial story is of assets, many of them frozen, not liabilities. It has trillions of dollars-worth of oil to back any debt it may issue in the future. Iran claims it needs $270bn to repair war damage.
Government revenues from oil and taxation have fallen from about 17% of GDP in 2018 to 11%. The fiscal deficit was roughly 3% of GDP in 2024. Unable to borrow from private creditors, policymakers have resorted to raiding the sovereign-wealth fund and printing cash. Iranian firms, cut off from the international banking system and SWIFT, must resort to subterfuge to pay trade partners even in China and Russia. Blackouts are common. Officials who once championed the "resistance economy" now plead for investment, particularly American, in core sectors such as energy. Although China buys Iran's oil in defiance of American sanctions, the regime itself impedes Chinese imports with high tariffs, benefiting powerful domestic interest groups including the IRGC. China has also sold Iran digital-surveillance tools that helped the regime brutally crush the December 2025 protests.
Iran's "axis of resistance" was supposed to be the Shia world's NATO: an attack on one implied an attack on all. But over the past year the "unity of fronts" has disintegrated. Iran abandoned its dependants, Hizbullah and the Assads, and left Alawites to be massacred unprotected on Syria's coast. None of its proxies came to Iran's rescue against Israel, apart from the odd Houthi missile. Iraq's Shia warlords had too many business interests to risk entering the fray. Iran has, in breach of agreements, cut gas supplies to Iraq, causing midsummer outages, in an effort to meet demand at home.
Shias comprise a little more than a tenth of Islam's 1.9bn believers. Until Ayatollah Ruhollah Khomeini's Islamic revolution in 1979, they had last held sway in the nearby Arab heartlands more than a millennium ago. The transnational movement he fostered carved a crescent of 2,300km spanning the Middle East. Azerbaijan, another Shia-majority state bordering Iran, has taken a different path: it embraced Israel long before Sunni leaders adopted the Abraham accords, supplying Israel with oil in return for weapons, technology and advice.
Iran has a long history of violent international operations. In 2024 judges in Argentina ruled that it was behind an attack on a Jewish community centre in Buenos Aires three decades earlier, which killed 85 people; the alleged mastermind was recently appointed head of the Islamic Revolutionary Guard Corps. In 2021 an Iranian diplomat was convicted of plotting to bomb a rally in France. Iran once relied on sympathisers and agents, but increasingly recruits young local criminals through social media, offering money for surveillance or attacks. In February 2026 a Danish court convicted two Swedes, aged 18 and 21, for terrorism after they threw hand grenades at the Israeli embassy in Copenhagen in 2024. Russia uses a similar tactic. Such operations often fail—the local criminals are inexpert and sometimes subcontract attacks to others—but even an unsuccessful operation creates fear and provides content for social media, at costs in prison time not paid by Iran or Russia.
In early 2026 a wave of attacks hit Jewish institutions in Britain, Belgium and the Netherlands, including firebombings of synagogues and ambulances belonging to Hatzola, a Jewish charity. Many were claimed by Harakat Ashab al-Yamin al-Islamia, a new group whose social-media activities overlap considerably with those of Iranian-aligned militias, according to the International Centre for Counter-Terrorism (ICCT), a Dutch think-tank. In October 2025 Sir Ken McCallum, the director-general of MI5, revealed that his agency had tracked at least 20 potentially lethal Iran-backed plots over the past year.
During the third Gulf war, a team backing Iran's regime released AI-generated videos ridiculing Donald Trump and glorifying resistance to America. Joseph Bodner and Krysia Sikora of the Institute for Strategic Dialogue found that two pro-Iran networks racked up more than a billion views on X in the first month of the war. The videos use thumping rap, English lyrics and Lego figures; they play up criticisms of Trump that resonate with a global audience rather than chanting "Death to America". Explosive Media, the group behind many of the videos, claims to be independent but operates from inside Iran, where the internet is shut down for all but those most favoured by the regime; a spokesman admitted to the BBC that the regime was a "customer". America's State Department had an office that counteracted enemy propaganda, but the Trump administration closed it.
Iran has a long track record of launching cyber-attacks on American interests in response to real-life skirmishes in the Middle East. In March 2026 Handala, an Iranian hacker group, breached Stryker, an American medical company, wiping data on more than 200,000 servers and devices and disrupting much of the firm's operations. Israel is reported to have hacked into traffic cameras in Tehran, allowing it to track the movements of Ali Khamenei prior to his assassination on February 28th.
Israel's attacks on Iran's aerial defence systems have left the country exposed. America's aircraft carriers and stealth bombers lurk nearby. Its pummelling of northern Yemen is a lesson of what it could do to Iran. Iran's erstwhile axis of resistance, from Syria to Lebanon and Gaza, has been dismantled. The Islamic Revolutionary Guard Corps, the regime's political militia, retains internal power but its external deterrent has been shattered.
Iran's Revolutionary Guards have purchased a Chinese satellite, which may be the source of some of the images published by Iranian state media showing the results of their strikes. China Siwei, part of the state-owned China Aerospace Science and Technology Corporation, is also known to have taken high-resolution photographs of American and allied military sites in the region.
Iran's naval forces have trained to use fast-attack boats, anti-ship missiles and mines in the Persian Gulf. When America and Israel staged military exercises in the Red Sea in early 2026, the IRGC sent its navy to briefly close the Strait of Hormuz and conducted war games with Russia. Russia is apparently providing Iran with laser-guided shoulder-borne missiles. Iran has air-defence batteries and missile bases along its southern coast. Though it is a big oil producer, its ageing refineries struggle to meet domestic demand for petrol. More than a third of the world's seaborne crude and a fifth of its liquefied natural gas pass through the Strait of Hormuz. Iran has never attempted to close the strait, despite threatening to do so several times, not least because the waterway is vital to its own exports. Even during the "tanker war" of the 1980s, when Iran and Iraq fought and 239 oil tankers were bombed, shipments did not slow and prices stabilised after an initial spike.
On April 26th 2025 a blast erupted at Iran's main port, Bandar Abbas, killing at least 70 people, just as the third round of nuclear talks with America was beginning. Officials brushed it off as an accident.
The Islamic Republic comprises two non-congruent subsystems—the state and velayat-e faqih ("guardianship of the Islamic jurist")—whose interaction generates chronic instability: the functional operation of one produces dysfunction in the other. Every political figure who has tried to act as a statesman within the system has eventually been neutralised: Mahmoud Ahmadinejad, Mohammad Khatami and Hassan Rouhani were barred from future office; Ali Rafsanjani was eliminated; Mir Hossein Moussavi and Mehdi Karroubi were imprisoned. The seizure of the American embassy in Tehran in 1979 embedded "Death to America" into the ideological core of velayat-e faqih, making permanent confrontation with the West a constitutive feature of the system.
In 2022 large-scale protests erupted calling for freedom from the regime's religious constraints; some 500 protesters were killed. The protest movement lacks a leader or a common agenda. Several times in the past two decades Iranians have tried to rise up, only to be beaten back. Iran's independence movement is cross-cut by intense nationalism: even critics of the regime fear that its collapse could lead to civil war, ethnic separatism in Kurdish and Azeri provinces, or a military successor regime that might rush for a nuclear bomb. Polls suggest that ordinary Iranians have been consistently keen for their country to acquire a nuclear weapon.
The government has executed more than 1,000 people in the year to November 2025, the highest number since the 1980s. Human-rights groups report a spike in suspicious "suicides" in prisons. More than 20,000 Iranians have been held for questioning since the June 2025 war revealed how much detailed information Israel had about the regime's inner workings. Turnout in Tehran in the 2024 presidential poll was just 11%. Farmers agitate against desertification; bakers, lorry drivers and nurses denounce dwindling subsidies; students chant "IRGC—you are our ISIS" at rallies.
The morality police who once enforced the mandatory hijab have vanished. Except at government offices and events, women's bare heads are now the norm. Anti-Americanism is fading: diplomats imply they are almost friendly with their American counterparts. Even a guide at the former American embassy—today a museum cataloguing America's sins—says the students who seized the building in 1979 and held its occupants hostage now admit the takeover was a mistake.
On December 28th 2025 electronics vendors in Tehran went on strike; most of their wares are imported, and it is hard to buy and sell such goods with the rial in free fall. Other businesses joined the walkout, including shops in Tehran's grand bazaar. Protests spread outside the capital and are continuing—the widest unrest since 2022, though still far smaller and not yet a nationwide uprising. Most demonstrations draw just a few hundred people, concentrated in provincial cities. The regime has deployed riot police and water cannons on the backstreets of central Tehran. Schools and universities have been closed on the pretext of air pollution, a tactic to forestall mass action. Footage of security forces raiding hospitals to arrest wounded protesters has enraged the public; some demonstrators have torched police stations.
The rial is at an all-time low near 1.5m to the dollar, having lost 45% of its value in the past year and 98% in the past decade. Inflation is above 40%. Masoud Pezeshkian, the president, admitted on the eve of the protests: "I can't do anything." His main economic reform scraps a preferential exchange rate for imports of essential goods, using the savings to send monthly cash transfers of 10m rials per person—worth less than $8. Fatemeh Mohajerani, a government spokeswoman, acknowledged this will lead to "significant" price increases for chicken, eggs and other staples.
A fractured opposition has been coalescing around Reza Pahlavi, the exiled son of the shah overthrown in 1979. Saeed Laylaz, an economist favoured by the regime, urged Ali Khamenei to step aside in favour of a "Bonaparte", naming Mohammad Bagher Qalibaf, the parliamentary speaker and former IRGC commander. Some insiders have even floated Pahlavi's name, perhaps to be installed with the IRGC's blessing. On January 2nd 2026 Donald Trump warned Iran not to kill peaceful protesters, writing "America will come to their rescue. We are locked and loaded and ready to go." Khamenei's 37th year as supreme leader could prove as perilous as that of the last shah, who was toppled after 37 years on the throne.
After two weeks of chants of "death to the dictator", Khamenei met the protesters with bullets. Militiamen allied with the Revolutionary Guards, toting automatic rifles, rode in on swarms of motorbikes. Snipers fired into crowds as surveillance drones buzzed overhead. Morgues overflowed; families crowded into them in desperate search of loved ones. HRANA, a Washington-based human-rights monitor, has confirmed over 6,300 deaths and 26,000 arrests. The real toll may be as high as 30,000, according to opposition sources. Parents pay the "bullet tax"—ransoms of thousands of dollars—to retrieve the bodies of their shot children. Tens of thousands more were detained. The head of the judiciary vowed swift executions. The crackdown dwarfed the killings during the 2022 protests, when around 550 people died in two months, and may exceed even the mass executions of 1988, when thousands of prisoners were sent to the gallows. Some protesters fought back with knives and hunting rifles; opposition groups tallied around 150 security men killed.
On January 8th Reza Pahlavi, the exiled son of the deposed shah, urged Iranians to take to the streets en masse, turning a provincial rally of jobless angry men into a mass mobilisation that swept Tehran and other cities. Cries of "Javid Shah" ("Long live the king!") were widespread. On the same day the regime shut internet connectivity to 1% of normal levels—worse than any previous blackout. Iran manipulates the Border Gateway Protocol and inspects individual data packets to block VPNs, while maintaining a domestic internet so as not to plunge the country into the analogue age. Tens of thousands of Starlink terminals, illegal in Iran, have been smuggled into the country since 2022, but the regime appears to be disrupting them too, possibly by jamming GPS signals on a nationwide scale. State television broadcast images of victims' bodies, acknowledging that many had been "ordinary people" rather than armed saboteurs.
The regime had nothing to offer an angry people. The rial had plunged by 40% since July and hit an all-time low; annual inflation was nearly 50%. Almost one-third of Iranians lived in poverty. Just a third of working-age adults were employed, according to the World Bank. In October the bank Ayandeh collapsed under the weight of insider lending, including to the failed Iran Mall project, billed as the world's largest shopping centre. Officials were reportedly investigating $7bn in missing oil revenues siphoned by government-sanctioned middlemen known as "trustees" who oversee the illicit oil trade and prefer to keep their proceeds abroad.
Trump spent weeks promising to "rescue" protesters and make the regime "pay hell". On January 12th he announced tariffs of 25% on countries that trade with Iran, and on January 13th rebuffed an offer from Araghchi to revive nuclear talks. America began withdrawing some personnel from al-Udeid air base in Qatar and from Bahrain, implying a strike was imminent. Having bolstered its forces in the Caribbean, the Pentagon had no aircraft carriers deployed in the Persian Gulf, though one was en route. Iran's parliamentary speaker warned his country would hit American bases in the region in response to any attack. Trump later suggested an attack may no longer be necessary, saying "we've been told that the killing in Iran is stopping."
The IRGC, believed still to number around 170,000 men, and its paramilitary brownshirts, the Basij, may consolidate power, potentially ditching the clerics and transforming Iran into something closer to Egypt or Pakistan. The regular army founded under the shah is about 400,000-strong. But they cannot solve Iran's economic problems without lifting American sanctions, which would require curtailing the nuclear programme and ending support for regional militias. Iran remains a diverse country—Azeris and Kurds in the north-west, Arabs in the south-west, Baluchis in the south-east—all with a record of violent insurgency, raising fears among Arab states across the Gulf that a fragmented Iran could lose control of its arsenal and send out waves of refugees.
As America massed an armada off Iran's coast in early February 2026—the largest air and naval build-up in the Middle East since the 2003 invasion of Iraq—Khamenei was said to have moved to a fortified bunker. He warned that "if [America] starts a war, this time it will be a regional war." Turkey said it was considering setting up a buffer zone to guard against an influx of Iranian refugees. Human-rights groups have confirmed the deaths of over 6,500 people in the recent protests and are verifying those of 17,000 more. Iran International, an opposition television channel based in Britain, puts the death toll at over 36,500. Many supporters of former president Mahmoud Ahmadinejad, a one-time hardline populist, have switched allegiance to Reza Pahlavi. They are ditching religious symbols for royalist ones—the lion and sun—and their chants are openly anti-Islamic: "One mullah per lamppost" and "Burn the Quran."
When universities reopened on February 21st (they had been closed on January 4th, ostensibly because of the "cold"), campuses filled with protests for three consecutive days. At Tehran University—a bastion of anti-monarchist sentiment before the shah's overthrow in 1979—students chanted for the restoration of the monarchy and waved its old flag. Newspapers began testing red lines: editorials openly decried the January killings; one covered its front page with the names of the 3,117 officially acknowledged dead; another stamped the shah's sun-and-lion emblem on its masthead. In peripheral provinces dominated by non-Persian minorities, talk of secession is growing. Some Iranians are buying weapons; bootleggers running home-delivery of alcohol now also peddle guns. Many of the tens of thousands detained after earlier protests have been released, though the coercive machinery of the state remains visible: pickup trucks mounted with guns wait in the streets.
Reformists still hope to invert the political hierarchy and shift power from the clergy to a secular presidency. Names suggested for a strongman include Mohammad Bagher Qalibaf and Ali Larijani, a veteran power-broker who heads the Supreme National Security Council. Both have children who are living or have tried to live in North America. Reza Pahlavi, the former shah's son, is the most visible dissident figure; he has filled the void left by repression at home. But his ambitions are challenged by a broad front of progressives backed by teachers' and truckers' unions, students, women's-rights activists and political prisoners, including Narges Mohammadi, a Nobel peace-prize winner. The Azadi network, a women-led collective launched in London by activists from the "Women, Life, Freedom" movement, has released a 39-page "Democratic Transition Framework" proposing 100 days of international supervision followed by monitored elections for a constitutional assembly. In a survey in 2024 by GAMAAN, a Dutch research group, 89% of respondents favoured democracy, but they disagreed about its form: 26% preferred a secular republic, 21% wanted a republic combined with a monarchy, and 20% favoured an Islamic republic. Khamenei relies on a base of some 13m voters who backed a hardliner in the last election.
Between them Britain and America helped orchestrate three coups in Iran in the 20th century: in 1921, 1941 and 1953. Anger at those coups partly fuelled the 1979 revolution. Reza Pahlavi, then an army officer, staged a coup a century ago, founded a new dynasty and set Iran on a course of modernisation. The Shah pushed forward Iran's nuclear programme in the 1970s. Iran's 1979 revolution toppled the monarchy and installed a theocratic republic. In 1980 Saddam Hussein, Iraq's president, started the Iran-Iraq war, which lasted eight years and killed hundreds of thousands. Far from weakening the regime, the war strengthened the IRGC. In 1988 Ruhollah Khomeini, Iran's first supreme leader, likened accepting the ceasefire to drinking from a "poisoned chalice". That same year Donald Trump, then a New York businessman, said American warships in the Persian Gulf should be "harsh" towards Iran: "One bullet shot at one of our men, and I'd do a number on Kharg island," the wedge of land that houses Iran's main oil-export terminal. Ali Khamenei, then Iran's president, vowed to make the waterway a "graveyard" for the Americans. Almost four decades later their rhetoric is unchanged. Iran attacked Saudi oilfields with missiles and drones in 2019.
On February 28th 2026 America and Israel jointly attacked Iran in "Operation Epic Fury", in what has been called the third Gulf war. Ali Khamenei, the supreme leader, was killed in an Israeli air strike within 24 hours of the first bombs being dropped. The defence minister and the head of the IRGC were also killed. A Washington-based Iranian human-rights group said 1,114 civilians had been killed in the first days of fighting, including more than 180 children. Iran is a diverse country of 92m people.
Hours after Khamenei's death a three-man council was named to lead the country, in line with the constitution. Mojtaba Khamenei, the late ayatollah's second son, succeeded him as supreme leader, though he had never held office, lacked religious credentials and his appointment amounted to a hereditary succession. He is thought to be more eager than his late father to acquire a nuclear weapon. Iran has roughly 400kg of highly enriched uranium (HEU) buried inside the country, enough for about ten bombs. On March 9th Rafael Grossi, head of the IAEA, said the HEU was "mainly" at Isfahan, presumably in tunnels whose entrances had been sealed off with earth in February; some also remained at enrichment plants at Natanz and Fordow.
By March 12th over 1,800 people, mostly civilians, had been killed in Iran, according to a Washington-based rights group. The Pentagon said it had struck more than 5,000 targets. More than 50 Iranian naval ships had been sunk. Israel believed less than a third of Iran's ballistic-missile launchers remained operational. Iranian attacks peaked at 360 missiles and drones fired at the UAE on March 1st, but fell to 44 on March 10th. Israeli strikes on fuel depots in Tehran on March 7th left the capital shrouded in toxic smoke. Air strikes damaged all of Iran's solid-fuel propellant factories, as well as IRGC-linked energy firms, Mehrabad airport in Tehran (headquarters of Mahan Air, used by the Guards to smuggle weapons to proxies) and a data centre owned by Bank Sepah, a lender with close ties to the IRGC.
Iran continued to fight, increasingly targeting vital infrastructure: drones damaged oil refineries in Abu Dhabi and Bahrain, the international airport in Dubai and a port in Oman. On March 11th three cargo ships were hit in the Persian Gulf. Iran also threatened to target banks in the Gulf, which led HSBC to shut its branches in Qatar and Standard Chartered to evacuate its offices in Dubai. Neither Israel nor Qatar lost a warplane; Iran failed to shoot down a single American or Israeli jet.
Binyamin Netanyahu was blunt about wishing for regime change. Donald Trump, by contrast, seemed more focused on controlling the flow of Iranian oil—China buys the bulk, at a hefty discount—and less keen on full regime change. Israeli officials became more convinced of this after American officials expressed anger over the scale of the March 7th fuel-depot strike. Trump's statements were frequently contradictory: on March 9th he said the war was "very complete, pretty much", then hours later said "we haven't won enough". He demanded Iran's "unconditional surrender" and said he must be "involved in the appointment" of Iran's new supreme leader. Marco Rubio said the HEU would need to be physically retrieved: "People are going to have to go and get it."
Iran-watchers in Israel believe it may be months before any new demonstrations against the regime, since Iranians are unwilling to take to the streets while bombs are falling. The IRGC's power structures remain largely intact, though it has had two leaders killed in nine months, its surviving commanders are probably hiding, and decision-making has been delegated to field officers. Once thought to be a cohesive force, the IRGC now looks fragmented. The Gulf is losing more than $500m a day in revenue from tourism and travel.
Iran relied on missile-and-drone attacks against Israel and the Gulf states. On the first day it launched around 180 missiles at Israel and 250 at the Gulf; by day four those numbers had fallen to the low dozens. Iran declared the Strait of Hormuz "closed" to shipping and attacked oil and gas facilities and tankers. A senior IRGC official said on March 2nd: "We will attack oil pipelines and not allow a single drop of oil to leave the region." Command and control was wobbly: the regime gave commanders wide latitude to pick their own targets. Neither Israel nor Qatar lost a warplane; Iran failed to shoot down a single American or Israeli jet. On March 4th NATO air defences shot down an Iranian missile bound for Turkey. America and Israel put pressure on the regime by backing Kurdish insurgents. America carried out more than 2,000 strikes across Iran and destroyed more than 20 Iranian ships. On March 4th an American submarine torpedoed an Iranian frigate off the coast of Sri Lanka. Marco Rubio, the secretary of state, said the objectives were to destroy Iran's ballistic-missile programme and its navy; Pete Hegseth, the defence secretary, added its nuclear capabilities.
In the first week of the conflict six American soldiers were killed and several aircraft shot down by friendly fire over Kuwait. America closed its embassies in Lebanon, Saudi Arabia and Kuwait, and urged Americans to leave 14 countries in the region. Drone strikes hit Saudi Arabia, Kuwait, and the area around America's consulate in Dubai. Israel claimed to have destroyed half of Iran's missile launchers. Iranian missile launches slowed dramatically after the first days. Trump said the war could last "four to five weeks"—or "far longer". Just 27% of Americans thought the country should attack Iran before the first strikes, according to an Economist/YouGov poll; support rose by only five percentage points afterwards.
The Pentagon said it had carried out more than 7,000 strikes across Iran. Israel conducted thousands of its own, including a series of raids targeting senior officials. On March 17th Israel assassinated Ali Larijani, among the most powerful men in Iran, and the head of the Basij, the regime's paramilitary enforcers. The next day it announced it had killed the intelligence minister. America probably used just over 5,000 munitions in the first four days and around 11,000 in the first 16 days, according to analysis by the Payne Institute of Public Policy in Colorado, making it "the most intensive opening air campaign in modern history". More than 100 ships had been sunk. The death toll reached more than 3,000 Iranians killed, including at least 1,300 civilians, according to HRANA, a human-rights group.
The relentless assassinations of senior leaders were designed "to progressively disintegrate the state", as a former British intelligence officer put it. However, Israeli intelligence assessments suggested the regime could not be brought down by air strikes alone, only in conjunction with internal dissent—and that protesters would not take to the streets while bombs were still falling. Growing numbers of security-service personnel were said to be reluctant to show up for work. A former member of the IRGC said that, should the chain of command rupture, the security forces had a plan to disperse into 30,000 five-man units. Abbas Araghchi, the foreign minister, on March 18th not only demanded an end to the bombing of Iran, but also for America and Israel to cease all attacks in Iraq, Lebanon, Palestine and Yemen.
The conflict may best be understood as two parallel wars: one of American and Israeli air strikes against the regime, the other Iran's war on the global economy. Iran imposed a de facto blockade on the Strait of Hormuz through threats and sporadic missile and drone attacks on commercial vessels. The strait is just 54km wide at its narrowest point and flanked by mountains on both sides. Trump alternately begged and badgered allies to join a maritime coalition, then on March 17th said this was no longer needed.
Ninety per cent of Iran's oil exports are loaded at Kharg island. America bombed dozens of military targets there on March 13th but left the oil terminal untouched, for what Trump called "reasons of decency". A marine expeditionary unit was being redeployed from Japan to the Middle East, perhaps to seize the island and use it as leverage. A share of Gulf oil still flows through two pipelines bypassing the strait: one in Saudi Arabia can transport up to 7m b/d to Red Sea ports; another in the UAE can move about half of that country's 3.4m b/d to the port of Fujairah.
Iran escalated attacks on energy infrastructure. It launched dozens of drones at Saudi oil fields, attacked Fujairah, a big gas field and the Ruwais refinery (capacity of nearly 1m b/d) in the UAE, and—after Israel bombed Iran's portion of the world's biggest gas field on March 18th—targeted the processing plant on the Qatari side of the same field. The magnitude of Iran's attacks decreased from around 1,000 missiles and drones on the first day to about a tenth of that by mid-March, but even occasional attacks remained disruptive. Emirates, the state-owned airline of Dubai, had hoped to operate around 60% of its pre-war schedule on March 15th; then debris from an intercepted Iranian drone hit a fuel depot at Dubai's main airport. Conferences across the Gulf were postponed until autumn and hotel workers furloughed; thousands of expats left.
America used around 1,000 scarce "stand-off" munitions in the first six days, according to CSIS, a think-tank in Washington, as well as hundreds of medium-range and anti-radiation missiles. Once American and Israeli aircraft gained control of Iran's skies they shifted to cheap, plentiful JDAMs; two weeks in, the Pentagon estimated 99% of munitions used were of this sort. Hegseth boasted of "a nearly unlimited stockpile".
The greater strain was on air-defence interceptors. In the first week America fired around 140 Patriot PAC-3 MSE interceptors and more than 150 THAAD interceptors; it had already fired a quarter of its THAAD inventory the previous year defending Israel. No THAAD deliveries had been made since 2023; just 39 were slated for 2027. America had used more than 300 Tomahawk cruise missiles in the opening days, yet the Pentagon had planned to buy only 57 new ones in the current fiscal year. The cost of replacing the first four days' munitions alone would be $20bn-26bn. Two aircraft-carriers—the USS Abraham Lincoln and USS Gerald R. Ford—were involved, with the USS George H.W. Bush en route. The Ford had been at sea for almost 270 days and in mid-April would break the record for the longest carrier deployment since the Vietnam war; it suffered a 30-hour fire this month. America debuted the LUCAS drone, modelled on Iran's Shaheds, which could be mass-produced far more quickly than Tomahawks. A marine expeditionary unit was diverted from Japan and parts of a THAAD system from South Korea, cannibalising forces in Asia.
By late March, after a month of bombing, the regime endured. The hardline Revolutionary Guards remained in control. Domestic opponents, whether ethnic separatists or urban protesters, were deathly quiet. Iran's stocks of roughly 400kg of highly enriched uranium remained untouched, probably still under rubble. Iran had established a chokehold over the Strait of Hormuz, blocking exports of oil and gas from the Gulf that account for a fifth of global supply. The Houthis in Yemen held off shooting missiles at tankers in the Red Sea, helping to keep a lid on oil prices, which hovered around $100 a barrel. Pakistan's government stood by to mediate. Donald Trump said he had offered a 15-point plan for peace; officials in Tehran denied talks were under way. The Pentagon sent some of the 82nd Airborne Division to the region, suggesting escalation was still a possibility. The UAE warned against talks with Tehran, saying Iran was committing "economic terrorism".
For nearly two decades the Islamic Republic has frequently cut the internet in response to domestic dissent and foreign missiles. During uprisings in 2019 and 2022 it disabled Border Gateway Protocol (BGP) routes. The shutdown that began on February 28th 2026, after American and Israeli strikes, is different: instead of severing routes, the regime has set up the National Information Network (NIN), a closed domestic internet similar to networks in China, North Korea and Russia. The NIN provides no access to foreign media or platforms such as Facebook or WhatsApp. Bots trawl approved apps for anti-regime sentiment. All BGP routes remain up, allowing the government to grant internet access to approved individuals and entities while denying it to everyone else—meaning access for most Iranians could be shut down indefinitely. Psiphon, a VPN, recorded over 18.4m Iranian users in January 2026. Tens of thousands of Starlink satellite terminals have been smuggled into the country; being caught in possession of one can mean death.
On March 21st Donald Trump gave Iran an ultimatum: reopen the Strait of Hormuz within 48 hours or face the bombing of its power plants. Iran threatened to retaliate against power and water-desalination facilities in the Gulf. Two days later Trump reversed himself, announcing "very good and productive conversations" and postponing the attack. Diplomats in the region say Trump is exaggerating when he claims to be close to a deal: America and Iran have exchanged messages through intermediaries but have not spoken directly. Abbas Araghchi seemed dismissive of the overture, saying Iran had "no intention of negotiating for now."
America has demanded that Iran junk much of its nuclear programme, swear off enrichment, hand over its stockpile of more than 400kg of uranium enriched to 60% purity, accept limits on its ballistic missiles and end support for regional proxies. Iran wants the closure of American bases, reparations and control of the Strait of Hormuz—all non-starters for America. Compromises are available: Iran could dilute the uranium to a low level suitable for civilian use; it could forswear enrichment for a long but limited time; or it could enrich uranium as part of a consortium. In return some limited Iranian financial assets held abroad could be unfrozen. Any deal would need international monitors. Iran has told intermediaries it no longer wants to deal with Steve Witkoff, having been attacked twice while negotiating with him. It hopes instead to speak to J.D. Vance. Muhammad Bagher Qalibaf, the parliamentary speaker, is understood to be Trump's interlocutor. Oman mediated the previous talks but its allies are furious at its sympathetic stance; Pakistan, whose embassy in Washington represents Iranian interests in America, is another option.
Since the war began, Mojtaba Khamenei has not been seen or heard; rumours abound that he is in a coma, in a Moscow hospital or dead. The system has shifted from theocracy to something resembling a military junta, akin to Algeria, Egypt or Pakistan. The IRGC, a 190,000-strong paramilitary force, now appears to run both the state and the war. The National Security Council, dominated by military figures, sets overall strategy. On March 24th it replaced the assassinated Ali Larijani with Muhammad Zulghadr, an IRGC apparatchik. A revived defence council functions as a war room; its members are largely anonymous former or serving IRGC generals hiding in bunkers. Operational control rests with Khatam al-Anbiya, the IRGC's battlefield headquarters.
Among the IRGC's factions, Hossein Alaei, a retired general who once likened the late Khamenei's despotism to that of the shah, is openly reformist. Qalibaf heads a group of pragmatists. Saeed Jalili, who won 13.5m votes at the last presidential election, leads the hardliners, who are deeply hostile to compromise. It is uncertain whether all factions would obey an order to end hostilities, or stick to an agreement to halt nuclear development.
To guard against decapitation strikes the IRGC was divided into 31 sub-districts, each with its own weapons stockpile, target banks and autonomy to act independently should communications fail. The Basij, the IRGC's internal security affiliate, has been broken into tens of thousands of small, mobile cells that fanned out across mosques, schools and encampments under bridges. Early threats from Kurdish opposition groups in Iraq to march across the border have been repelled by IRGC reinforcements. Popular uprising has faded: the bombing of infrastructure has dulled enthusiasm for protest and the IRGC brands critics enemy collaborators.
On or around April 8th 2026 Shehbaz Sharif, Pakistan's prime minister, helped mediate a two-week ceasefire between America, Israel and Iran. Iran agreed to allow commercial shipping to resume through the Strait of Hormuz. Negotiations on a lasting peace were supposed to begin in Pakistan on April 11th. America and Iran gave wildly different accounts of the template for the talks. Trump imposed his own blockade, trapping tankers carrying as much as 2m barrels a day of Iranian oil, in an attempt to use the economy to force hardliners to give ground.
The truce was poorly observed. Israel, Kuwait, Qatar, Saudi Arabia and the UAE all reported subsequent Iranian drone and missile attacks. On April 8th Iran fired more than 50 drones and missiles at the UAE, one of the biggest barrages of the war. It struck a vital Saudi pipeline carrying 7m barrels a day (b/d) of oil to the Red Sea, bypassing Hormuz. In Kuwait it targeted power and water-desalination plants. Iran decried an air strike on an oil refinery.
Despite tens of thousands of American and Israeli strikes, Iran retained the ability to launch dozens of missiles and drones at Israel and the Gulf states every day. Israel's early-war assessment that it had neutralised over three-quarters of Iran's missile-launchers appeared to be an exaggeration; half is a more plausible figure, and even that includes devices that can be restored to working order fairly easily. Iran had lost much of its air force and navy; its air-defence network was in ruins. Israel did not lose a single warplane during the thousands of sorties it flew, and its missile-defence systems intercepted the vast majority of the more than 600 missiles fired at it; about 20 Israelis were killed.
Across the war Iran launched at least 4,784 drones and 1,851 missiles at targets from Cyprus to Oman. Most—at least 4,513 drones and 1,464 missiles—were intercepted. Conflict monitors mapped 3,164 strikes on Iran and a further 2,692 in the rest of the region. America claims to have hit at least 11,000 targets in Iran and Israel 10,000. On the first day of the conflict, a strike near an IRGC naval base hit a girls' school, reportedly killing at least 175 students. About 18.5m of Iran's 93m people lived within a kilometre of a reported strike, as did 8.4m people in other countries.
Strikes on infrastructure weakened the already feeble economy further. Bridges, roads, railways, telecoms networks, airports and, an industrialist claims, half the passenger-jet fleet were destroyed, potentially loosening the centre's grip on the provinces. The destruction of security-services bases around the country may embolden Kurds and other minorities.
The ceasefire also threatened to revive old fissures within the regime. The paydaris (hardliners) attacked amalgarayan (pragmatists), led by Mohammad Baqer Qalibaf, the speaker of parliament, and fellow military veterans, for negotiating. "Instead of a ceasefire, let's strangle this rabid dog!" thundered Kayhan, the paydari mouthpiece. Some analysts saw Iran's continued attacks on Gulf countries after the truce as a reflection of splintering: the IRGC had given field commanders latitude to launch attacks on their own initiative, and some may have been unaware of the ceasefire or chose to ignore it.
There were tantalising hints of moderation. On the first day of the ceasefire the authorities freed Maryam Akbari Monfared, a political prisoner held for 17 years. State television, very unusually, aired interviews with unveiled women. Qalibaf and a coterie of pragmatic IRGC generals appeared to occupy the most senior positions within the government. A leadership less wedded to Ali Khamenei's anti-colonial diatribes may find it easier to repair relations with the West. Even Mojtaba Khamenei, the new supreme leader, is said to own luxury properties in London.
On April 11th J.D. Vance led an American delegation to face-to-face talks in Islamabad, brokered by Pakistan. After 21 hours of negotiations America and Iran failed to reach agreement. The two sides disputed whether the ceasefire covered Lebanon and could not agree on terms for reopening the Strait of Hormuz. Iran has no navy or air force remaining; it has lost and used up many of its missiles and drones. To rebuild, it must contend with an economy set back years by over 21,000 American and Israeli strikes.
On April 21st Donald Trump extended the ceasefire for a second time, retreating once again from a threat to bomb Iran's power plants. America's blockade of Iranian shipping remains in effect. Iran refused to attend a further round of talks in Islamabad, believing it has the upper hand and seeking the removal of the blockade as a precondition for negotiating. The Pentagon says it has stopped 29 ships from transiting Hormuz and seized at least two Iranian vessels, one as far away as the Bay of Bengal. Lloyd's List believes more than two dozen Iranian ships have dodged the blockade. Only one ship passed through the strait on April 21st. Brent crude remains around $100 a barrel.
The first negotiation (April 11th) ended with no agreement on key issues: America proposed a 20-year moratorium on enrichment; Iran countered with five years. The latest American proposal would start with a ten-year ban, followed by limited low-level enrichment. They also disagree on how to dispose of Iran's stockpile of more than 400kg of uranium enriched to near-weapons-grade.
For only the second time in the Islamic Republic's 47-year history, it is without a present and absolute supreme leader. Seven weeks after the strike that killed Ali Khamenei, his successors had failed even to agree on a date for his funeral. Mojtaba Khamenei may be incapacitated or too weak to impose his authority. Israeli assassinations have thinned the army's top ranks; their successors lack sway and experience.
Formal authority rests with the Supreme National Security Council (SNSC), comprising the president, parliament's speaker and the security services' chiefs. Mohammad Baqer Qalibaf, the speaker, has been designated chief negotiator, with Abbas Araghchi as his lieutenant. Their apparent readiness to negotiate has provoked a backlash from the IRGC. Pro-regime crowds have taken to denouncing Qalibaf and Araghchi. Military communiqués issued by men in fatigues have replaced sermons by clergy. At a recent rally an unveiled woman led chants, breaching the four-decade taboo on women singing solo in front of men. Guards-linked outlets have floated the idea of delaying municipal elections scheduled for May 1st 2026.
Mohammad-Bagher Zolghadr, the SNSC's secretary, leads the hardliners. His hatred for America dates back to the 1970s, when he belonged to the Mansouroun, a militant group that kidnapped Americans. A class of generals-turned-sanction-busters has emerged, benefiting from operations to circumvent American sanctions. America's sea blockade may bolster them further as overland trade must expand via Iraq, Russia, Central Asia and China.
Nationalists guided by realpolitik would trade Iran's proxy networks for sanctions relief; ideologues prefer keeping them as a force multiplier. On the nuclear question, nationalists say brinkmanship risks further attack, whereas ideologues prefer North Korea's model: get a bomb to bolster deterrence. Pragmatists see control of the Strait of Hormuz as leverage for a wider security pact with the Gulf Arabs; ideologues see it as a lucrative toll-booth. On April 15th 2026 Asim Munir, Pakistan's army chief, visited Tehran seeking common ground among Iran's factions.
Iranian oil exports are nominally handled by the National Iranian Oil Company (NIOC). In practice, oil has become a form of liquidity in a country short of hard currency: factions of the government, from the foreign ministry to the police, are handed barrels they can sell, as are some religious foundations. These allocations are controlled by roughly 20 oligarchs who use their networks to convert the oil into cash. Some have links to the IRGC, which runs its own oilfields. The Quds Force, the IRGC's international arm, controls 25% of Iran's crude output. This decentralised structure is hard to dismantle from the air.
China absorbs over 90% of Iran's oil. The buyers are roughly 100 small "teapot" refineries in Shandong province in the country's north. On paper these are independent of China's state-owned giants, which fear exposure to American sanctions; in reality some count Chinese oil majors as customers and own stakes in joint ventures with state-owned enterprises.
Iran's shadow payment system routes proceeds through disposable "trust" accounts opened at small Chinese banks on the mainland or in Hong Kong, registered in the name of shell companies set up by Chinese individuals. The oil proceeds are funnelled through myriad other trust accounts to wherever Iran needs them. Some of the money stays in China to pay for imports; the rest is dispatched around the world. The system is run by dedicated departments inside Iranian companies controlled by Iran's defence ministry or the IRGC; the density of their networks—numbering in the thousands of accounts—allows them to weather shocks. Bank accounts in East Asia, Britain, Germany, Georgia, Italy and Romania continue to be used. The extreme redundancy makes the money harder to trace even for Iran's central bank—and easier for the country's oil barons to skim.
During the third Gulf war, IRGC-controlled shipping tightened its grip on the Strait of Hormuz. Ships departing Kharg Island are vetted by the IRGC's naval command and issued a passcode; as they approach the strait they provide the code by radio, and an IRGC boat escorts them through a narrow corridor hugging Iran's coast. Some tankers are asked to pay a toll of several million dollars. The smaller Jask, Lavan and Sirri terminals are operational and amassing record stocks as backups to Kharg. Iranian tankers continue to employ every trick available—stealing other ships' credentials, forging documents, spoofing their locations—to conceal their cargo's provenance, with most transferring their load on the high seas off Malaysia or Singapore for the final leg to China.
In April 2025 Khalid bin Salman, Saudi Arabia's defence minister, made the highest-level Saudi visit to Iran since 1997. The ayatollahs have normalised ties with Saudi Arabia's rulers, whom they once castigated as "vile and ungodly", and want them to serve as a bridge between Iran and the rest of the Middle East and America. On a visit to Washington in late 2025, Muhammad bin Salman is thought to have delivered a message from Iran to Donald Trump expressing Iran's desire for a deal.
Non-Reciprocal Laws of Expectations: Negative expectations yield negative results. Positive expectations yield negative results.