Iran’s Supreme Leader, Ayatollah Ali Khamenei, was observed waving before casting his vote in the country’s presidential election held in Tehran, Iran on July 5, 2024.
Iran’s influential proxy network across the Middle East is facing significant setbacks from Israel, which has intensified its conflicts with the Lebanese militia group Hezbollah. On Friday, Israel executed several airstrikes in Beirut, resulting in the death of Hezbollah’s longtime leader, Hassan Nasrallah.
Hezbollah is considered Iran’s most significant strategic ally, functioning as both a militant and political organization. Since its inception in 1982, Tehran has funded and fostered the group, making it one of the most heavily armed non-state entities globally.
Israel’s operations began with a series of sabotage attacks earlier in September that led to the explosion of Hezbollah’s communication devices. This escalation culminated in the targeted killing of Nasrallah and several other senior commanders.
Iranian generals and Ayatollah Khamenei have vowed revenge, but their rhetoric suggests a more measured response so far. An all-out war between Israel and Iran would have devastating consequences for the region, particularly for Iran, which is already grappling with severe economic challenges and vulnerable oil facilities.
Interestingly, oil prices remain around $70 per barrel for international benchmark Brent crude, indicating that markets predict a conservative response from Iran, a major OPEC oil producer. Behnam ben Taleblu, a senior fellow at the Foundation for Defense of Democracies, noted that Israel’s recent actions have significantly weakened Iran’s proxy network in the region.
Following the recent assassination of former Hamas leader Ismail Haniyeh in Tehran, Khamenei promised a “blood for blood” response that has yet to materialize. In contrast, the response to Nasrallah’s killing has been notably restrained, with Khamenei stating that Hezbollah would determine its course of action.
Iran’s economy, suffering from years of sanctions, mismanagement, and corruption, is in no position to afford a war. The newly elected president, Masoud Pezeshkian, is reportedly focused on mending relations with the West and resuming talks on the Iranian nuclear deal, which could ease sanctions.
Pezeshkian, described as a reformist, is advocating for restraint in response to Israel’s ongoing strikes on Hezbollah and Yemen’s Houthi militants. Sina Toossi, a senior fellow at the Center for International Policy, noted that despite aggressive rhetoric, Iran has shown considerable restraint in practice.
Hard-line factions within Iran’s government, however, believe a strong response is necessary to deter Israel from potentially targeting Tehran or its nuclear sites. Currently, Iran’s priority seems to be maintaining its regional influence and continuing low-intensity conflicts without triggering broader confrontation.
On Monday, Israeli Defense Minister Yoav Gallant suggested a possible ground offensive into Lebanon, which may alter Iran’s strategy. Hezbollah, on the other hand, announced that it will appoint a new leader and continues to launch rockets into Israeli territory.
The conflict has forced tens of thousands of people on both sides of the Israel-Lebanon border to abandon their homes due to continued cross-border fire following the October 7 attack on Israel by Hamas. In the last two weeks, over 1,000 Lebanese have been killed and around 6,000 injured by Israeli attacks, according to Lebanon’s Health Ministry.
Iran remains committed to supporting its regional proxies, as Ali Vaez from the Crisis Group noted, but providing strategic depth through non-state actors remains Iran’s primary strategy despite setbacks. Israel continues its tactical victories, yet these have not met the strategic goals of displacing Hezbollah from its northern border.
Helima Croft from RBC Capital Markets observed that while some oil market participants might overlook the escalation due to a lack of major supply disruptions, it remains uncertain where this regional conflict is headed.
The article has been updated to correct a mention of the Netanyahu government’s strategic goals in the conflict with Hezbollah.
