[ANALYSIS] US–Israel Launch Joint Strikes on Iran; Regional Escalation Underway

• The US and Israel launched a large-scale joint military operation against Iran on Saturday, 28 February, with explosions reported across Tehran shortly after 09:30 local time (06:00 GMT / 01:00 EST), and additional strikes confirmed in Isfahan, Qom, Karaj and Kermanshah.
• The operation — described by US President Trump as “major combat operations” — targeted Iranian nuclear, missile and senior government infrastructure.
• Israeli officials characterised the action as a “pre-emptive strike” to prevent Iran from obtaining nuclear weapons.
• President Trump's Truth Social video announcement hinted at, but fell short of explicitly stating an aim for regime change.
• President Trump framed the objective as eliminating imminent threats posed by Iran’s nuclear and ballistic missile programmes, while also publicly calling on Iranians to “take over your government.”
• Israeli PM Netanyahu confirmed the joint operation would continue “as long as needed.”
• Iran has launched immediate retaliatory missile and drone attacks against Israel and multiple US military installations across the Gulf.
• Regional airspace closures and widespread flight suspensions are now in effect.
• Multiple Gulf states, including the UAE, Qatar, Kuwait and Bahrain, activated air defence systems to intercept Iranian missiles.
• Escalation risk is materially elevated. At the time of writing, there is no clarity on whether US-Iran negotiations will continue amid the current military escalation.

Strategic Shift

• Public messaging from both Washington and Jerusalem suggests objectives extend beyond infrastructure targeting and toward potential regime destabilisation.
• Iran has formally declared US bases and interests in the region “legitimate targets.”

Regime & Infrastructure Targeting

• Strikes reportedly focused on:
  • Nuclear-related infrastructure
  • Ballistic missile facilities
  • Ministries of Intelligence and Defence
  • The Presidential compound
  • Areas near the Supreme Leader’s office
• Israeli sources indicate senior leadership figures were targeted, including Supreme Leader Ayatollah Ali Khamenei and President Masoud Pezeshkian.
• Iranian media states both remain alive, with Khamenei reportedly relocated to a secure site.
• No confirmed deaths of top political leadership have been announced.

Iranian Retaliation:

• Iran launched missiles and drones toward:
  • Israel (interceptions reported over Jerusalem, Tel Aviv and Haifa)
  • Bahrain (US Fifth Fleet facilities)
  • Qatar (Al Udeid Air Base)
  • UAE (Al Dhafra Air Base; civilian fatality reported in Abu Dhabi)
  • Kuwait and Jordan (US-linked installations)
• The IRGC has warned that further retaliation will continue.
• Israel has activated Iron Dome and Arrow systems.
• Multiple countries have reported using their missile defence systems to intercept Iranian projectiles.
• US and allied forces have reportedly used Patriot and THAAD interceptors in the Gulf.

Casualty numbers remain fluid and unverified.

• Iran: Iranian state media reports fatalities following a strike on a girls’ school in Minab. Broader casualty estimates remain unclear.
• Israel: Civilian casualties and injuries reported following missile interceptions and impacts. Nationwide sirens and shelter orders remain active.
• UAE: One civilian confirmed dead in Abu Dhabi due to debris from intercepted missiles.
• US: No confirmed US military fatalities at the time of writing. Officials warn losses remain possible if operations continue.

• EU: EU foreign policy leadership described the situation as “perilous” and called for the protection of civilians.
• UK: The UK confirmed it did not participate in the strikes and urged the avoidance of wider regional escalation. UK PM Starmer is chairing an emergency COBRA meeting.
• Saudi Arabia: Condemned Iranian retaliatory strikes on Gulf states as violations of sovereignty and pledged solidarity with affected neighbours.
• Russia: Condemned the US–Israeli strikes as reckless and destabilising.
• Indonesia: Offered mediation, signalling willingness to facilitate dialogue.

1) Duration of Operations

• US officials indicate operations could last several days or longer.
• Both Washington and Jerusalem have signalled willingness to continue strikes.
• Iran has warned of sustained retaliation.

2) Escalation Risk

• Attempts by Iran to disrupt shipping in the Strait of Hormuz
• Activation of proxy groups across Lebanon, Syria, Iraq or Yemen. Reports suggest Israel is sending troops to its Northern border with Lebanon amid a risk of Hezbollah interference.
• Expanded missile exchanges
• Direct US casualties triggering deeper engagement

3) Diplomatic Impact

• Recent indirect US-Iran nuclear talks ended without agreement.
• At the time of writing, there is no clarity on whether negotiations will continue amid the current military escalation.

• Heightened risk premium in crude markets likely, particularly given proximity to Gulf export infrastructure - Strait of Hormuz disruption remains the primary tail risk.
• Gold and US Treasuries could be supported in early trade.
• Continued escalation and prospects of a lengthier war will likely weigh on risk assets.