Iran Strikes Back as Mideast Conflict Widens

Summary

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WSJ What’s News: Iran Strikes Back as Mideast Conflict Widens

Date: March 2, 2026
Host: Luke Vargas (Wall Street Journal)
Featured Guests:

• Andrew Dowell (WSJ Middle East Editor)
• Sune Rasmussen (WSJ Correspondent)
• Julia Petroni (Dow Jones Commodities Reporter)

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Episode Overview

This episode dives deep into the rapidly escalating conflict in the Middle East after the killing of Iran’s Supreme Leader, Ali Khamenei. The discussion covers the scale and aims of the ongoing US-Israeli military operations in Iran, Iran’s sweeping retaliation across the region, implications for global markets, the evolving political crisis inside Iran, and the broadening conflict’s impact on global energy and trade.

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Key Discussion Points & Insights

1. Escalation of Military Operations

• US & Israel Response:

  • In the 48 hours since the conflict began, the US and Israel have collectively struck more than 2,000 targets inside Iran.
  • Strikes targeted leadership figures, missile sites, naval assets, and regime control structures.
  • President Trump vowed to "avenge the death of three American troops" (00:49).
    • Memorable Quote:

      “We grieve for the true American patriots who have made the ultimate sacrifice for our nation even as we continue the righteous mission for which they gave their lives.”
      — President Trump (01:27)

  • The Associated Press reports 555 people killed in Iran so far, with uncertain military/civilian proportions (03:02).

• Measuring Progress

  • Goals: Prevent Iran from acquiring nuclear weapons, limit its ballistic missile production, and encourage regime change (02:10).
  • Andrew Dowell underscores the difficulty in tracking progress due to the expansive and ambitious US-Israeli aims.

2. Iran’s Regional Retaliation & Widening Conflict

• Regionalization of Conflict:

  • Iran responded with overwhelming force, firing 700+ drones/missiles at the UAE in 36 hours, and attacks on Kuwait, Bahrain, Oman, and as far as Cyprus (03:39).
  • Iran not only targeted US military bases, but also civilian and economic symbols such as Dubai’s Borj Al Arab and Palm Island.
  • Impact on the Gulf:
    • UAE’s reputation as a global commercial hub and “oasis of calm” is now at risk.
    • Threatens expatriate-heavy populations and could reshape perceptions of the region’s safety and economic stability.

• Potential Regional Repercussions:

  • Luke Vargas references Yaroslav Trofimov’s suggestion that Iran’s regional attacks might harden Gulf resolve against Iran, potentially escalating further (05:04).
    • Quote:

      “Now that Iran has shown a willingness to attack the Gulf, … they’re very likely thinking now that this is a threat they can’t live with and that will pose an existential threat to their own economies and economic plans if it persists.”
      — Andrew Dowell (05:23)

• Hezbollah-Israel Tensions:

  • The fragile ceasefire since late 2024 is now shattered, with escalating violence between Israel and Iran’s Lebanese proxy (06:10).
    • “The lid is fully come off and fighting picking up very rapidly there.” — Luke Vargas (05:48)
    • Dowell explains Hezbollah is under pressure to retaliate after Khamenei’s killing but has also made itself more vulnerable to Israeli attack.

3. Political Fallout and Leadership Succession in Iran

• Aftermath of Khamenei’s Death:

  • Sune Rasmussen details that the Iranian system is designed for continuity—even after the Supreme Leader’s death.

  • Leadership temporarily rests with a three-man council (President, Judiciary Head, Guardian Council member), with the Assembly of Experts eventually choosing a new Supreme Leader (08:11).

  • Unlikely to be true regime change; a more collective leadership, with heavy roles for clerical and military elites (especially the Revolutionary Guard).

    • Notable insight:

      “The next Supreme Leader is going to be a person that has a much more ceremonial role … more of a collective leadership working behind the scenes.”
      — Sune Rasmussen (08:57)

• Command and Control:

  • Despite US claims of eliminating Iran’s top military command, Rasmussen notes “no signs of defections or people laying down arms yet.” Iran’s retaliation capability remains strong (10:19).
    • “Iran is bombing almost every country in the Gulf. It’s striking back against Israel. … The Iranian system is designed to continue fighting even if top commanders are killed.” — Sune Rasmussen (10:19)

4. Economic and Market Impacts

• Oil & Energy Markets:

  • Julia Petroni explains the strategic importance of the Strait of Hormuz, where 20 million barrels of oil pass daily (12:22).
  • Iran’s threats prompt shipping reroutes and market panic, with banks predicting $100 a barrel oil if the strait closes entirely.
  • Container companies are avoiding key Middle East routes, underscoring severe risks to global supply chains (12:22).
  • Quote:

    “Even limited delays can have significant impacts for supply chains. … In the event of a complete closure, that would have a major, major impact for supply chains.”
    — Julia Petroni (12:22)

• Investor Responses:

  • Surge in gold and dollar as safe-haven assets.
  • Heightened volatility with natural gas pricing and global equity jitters.

• Tech and Geopolitics:

  • US reportedly leveraged Anthropic’s AI in targeting, despite government-blacklisted status. This highlights the blurred boundaries between Silicon Valley and the Pentagon.
  • Anthropic CEO Dario Amade pushes back on US intervention in tech, framing it as a free speech issue.

• Additional Headlines:

  • Nvidia developing new AI processors for inference computing.
  • BYD and other Chinese EV makers reporting steep sales declines ahead of major Chinese policy planning events.

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Notable Quotes & Memorable Moments

• On the Expanding Theater of Conflict:

  "Dubai is a massively international city. The airport is the busiest one in the world for international travelers…And it's been hit. Overwhelming percentage of the population is expatriate. So there's a real risk to these countries that ... they could start being seen as a place to be avoided as opposed to one to flock to."
  — Andrew Dowell (04:14)

• On Succession in Iran:

  “It's happening according to the Constitution in what I guess you would call an orderly fashion, considering the circumstances.”
  — Sune Rasmussen (08:11)

• On Market Effects:

  “Should Iran shut the strait, several banks are predicting $100 a barrel oil could be in play … a type of price jump that would push up the cost of fuel for cars, power plants and more the world over.”
  — Luke Vargas (13:09)

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Timestamps for Key Segments

• US/Israeli Airstrikes, Trump Statement: 00:49–01:40
• Targets & Assessment of Strikes: 02:10–03:02
• Iran’s Regional Retaliation & Civilian Impact: 03:39–05:04
• Hezbollah–Israel Escalation: 05:48–06:49
• Power Vacuum & Iranian Leadership Succession: 07:32–09:59
• Continuity in Iran’s Military Command: 09:59–11:04
• Market and Energy Consequences: 11:52–13:40

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Summary Takeaways

• The death of Iran’s Supreme Leader has led to an unprecedented, region-wide military escalation, with both military and civilian targets hit.
• The US/Israel campaign aims not only at military deterrence but potentially regime change—though Iran’s system is proving institutionally resilient and capable of rapid leadership succession.
• Iran’s retaliatory strategy has shattered the Gulf’s reputation for security, drawing in multiple regional states and threatening global economic interests.
• The Strait of Hormuz’s vulnerability has sent energy markets into turmoil, with ripple effects across global supply chains and commodities.
• The conflict underscores the increasingly entangled roles of technology companies in warfare and highlights economic vulnerabilities in both East and West.

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For listeners seeking a comprehensive snapshot of today’s crisis in the Middle East—and its immediate global consequences—this episode offers a brisk, informed, and nuanced overview grounded in front-line reporting and market expertise.

Transcript

[A]

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[B]

Iran strikes back following the killing of its supreme leader. We'll get the latest. As conflict spreads across the Middle east,

[A]

combat operations continue at this time in full force. And they will continue until all of our objectives are achieved.

[B]

Plus, we'll take a look at the economic impact as fighting sends oil prices surging and upends global supply chains. It's Monday, March 2nd. I'm Luke Vargas for the Wall Street Journal and here is am edition of what's news, the top headlines and business stories moving your world. Today, 48 hours after launching major combat operations against Iran, the US and Israel are keeping up the fight. We report that they have collectively struck more than 2,000 targets inside Iran. And speaking last night, President Trump pledged to push on, saying the US Would avenge the death of three American troops killed over the weekend.

[A]

We grieve for the true American patriots who have made the ultimate sacrifice for our nation even as we continue the righteous mission for which they gave their lives.

[B]

Meanwhile, the US Is far from alone in coming under fire as Israel, a number of Gulf states, and even the Mediterranean island of Cyprus, home to a British military base, find themselves on the receiving end of Iranian counterattacks. Here to make sense of what's going on is Wall Street Journal Middle east editor Andrew Dowell drew 2,000 targets struck within Iran. Do we know what those are? Can we start to sort through what has actually been achieved here? How are we measuring progress in this campaign?

[C]

It's difficult from the outside to measure that progress just because the goals that he set are pretty expansive and difficult to track. So the administration's made clear they want to make sure that Iran doesn't ever get a nuclear weapon. They've also talked about limiting their production of ballistic missiles and even made clear that they want the people of Iran to rise up and overthrow the regime. So the US And Israel went hard at Iran's leadership at the beginning of the conflict. They've killed Supreme Leader Ali Khamenei and a number of other top military and political figures. They've hit missile sites around the country. They've claimed to have sunk a number of Iranian naval ships, and they've been pounding away with sort of increasing ferocity on the structures of the regimes control, namely like DIRGC and other security services, facilities that are needed to keep the population in line.

[B]

Drew, we should probably add that in addition to those targets, the Associated Press is reporting that according to the Iranian Red Crescent Society, these attacks from the US and Israel so far have killed 555 people in Iran. We don't know how many of those are members of the military versus civilians, but that's a factor here as well. Let's talk now about how Iran is fighting back. We have seen attacks using drones and missiles against military bases, but also civilian facilities, hotels, airports. And these attacks occurring in places like Dubai and Abu Dhabi and now affecting hundreds of thousands of civilians who are all getting caught up in this.

[C]

Yeah, Iran had made clear going into this that if they were attacked even in a small way, that they would immediately regionalize the conflict. And they're delivering on that. The UAE in particular has come under a heavy bombardment. Last night they were saying some, maybe 700 drones and missiles have been fired at the UAE in just the first 36 hours of conflict. Dozens to hundreds more have been fired at Kuwait and Bahrain. Even Oman got hit a couple of times and then as far away as Cyprus. And it seems clear from the types of targeting that it's not just military targets. The US does have military bases in a lot of these places, but yeah, they're also aiming at cultural symbols like the Borj Al Arab building in Dubai, the Palm in Dubai, and hotels and other economic infrastructure elsewhere. So it's, it's an enormous problem for the Gulf, honestly. These countries, particularly the uae, have billed themselves as an oasis, calm in the middle of, you know, a very turbulent and violent Middle East. The UAE is a commercial hub for the world. Dubai is a, you know, a massively international city. The airport is the busiest one in the world for international travelers, second busiest in the world, period. And it's been hit and overwhelming percentage of the population is expatriate. So there's a real risk to these countries that people's opinions could change, their reputation could change, and they could start being seen, like a lot of the Middle east, as a place to be avoided as opposed to one to flock to and bring money to.

[B]

You indicated earlier the intention here, bringing the fight to these countries may be an effort on Iran's part to draw this to a close, but at least our chief foreign correspondent Yaroslav Trofimov reporting sort of overnight, perhaps it could have the opposite effect, kind of deepening the resolve of these countries to fight back against Iran, maybe put this nuisance to bed once and for all. Is that possible?

[C]

Yeah, I think he's definitely onto something there. You know, now that Iran has shown a willingness to attack the Gulf, and now that Iran has shown a willingness to do that, even though the Gulf publicly denied the US Access to its bases and airspace in order to conduct the attack, they're very likely thinking now that this is a threat that they can't live with and that will pose an existential threat to their own economies and economic plans if it persists.

[B]

A lot to watch. And that's not all of it because we finally have to mention there is now a battle rapidly escalating between Iran's proxy in Lebanon, Hezbollah and Israel. A very fragile ceasefire had been in place between those two sides dating back to the end of 2024. And now it seems the lid is fully come off and fighting picking up very rapidly there.

[C]

Yeah, that's right. I mean, the ceasefire has existed, but it's only really been a ceasefire in name and it's been pretty one sided. Israel's military has attacked Hezbollah targets or whether they've said as Hezbollah targets in Lebanon more than a thousand times during that period, the Lebanese army has been working to disarm Hezbollah with limited success. And Israel has been sort of waiting for a chance to go back in and finish the job and Hezbollah just gave them one. So Hezbollah as a group aligned with Iran is under a lot of pressure internally to react, especially to the killing of Supreme Leader Ali Khamenei. And they have, but they've opened themselves up now to a pretty significant attack by Israel.

[B]

Andrew Dowell is the Wall Street Journal's Middle east editor. I have a feeling we'll be back on with you as the week progresses. Drew, thank you so much for the update.

[C]

Thanks.

[B]

Well, away from the battlefield, this conflict is also leading to major political changes in Iran. Journal correspondent Suna Rasmussen has been monitoring who in the Iranian leadership has been taken out by these US And Israeli strikes. And he joins me now with more. Sunnah, the Ayatollah is dead. The killing of the Supreme Leader Ali Khamenei on Saturday, definitely dealing a blow to Iran's ruling structure. And yet I think a lot of people are asking at this point if this is actually changing anything. What can you say? How is the Iranian establishment reacting here?

[A]

I think it would be a bit cavalier to say that the killing of Khamenei doesn't change anything. But the Iranian system has been built to Sort of not rely on one person, even if that person, like Khamenei, like the Supreme Leader, has the final say on all matters of national security. He always surrounded himself with a lot of advisors and relegated decision making to a lot of people around him. Military commanders, but also political civilian officials, and probably in preparation for something like this.

[B]

I mean, are we seeing signs that this is proceeding in an orderly fashion, or are there, I don't know, indications of some sort of destabilizing power vacuum that someone else might try to sweep into?

[A]

Yeah, actually it's happening according to the Constitution in what I guess you would call an orderly fashion, considering the circumstances. So the first step step is to form a three man council. And that council consists of the president, the head of the judiciary, and then a member of what's known as the Guardian Council, which is a powerful clerical council that has been formed and they are now sort of the Interim Leadership Council. Then what's known as the assembly of Experts will select a new supreme leader. How long that's going to take, we don't know.

[B]

I mean, we've seen the CIA had assessed that a hardliner could take power in the ayatollah's absence. I mean, is it safe to say we're not seeing regime change per se? The regime is just finding someone new to take the place of the ayatollah.

[A]

I think the nature of what we call the regime or the Islamic system in the Islamic Republic will be different because Ayatollah Khamenei was so powerful and he kind of weeded out all clerical rivals. We should say that the Supreme Leader has to be a cleric, and he has to be a cleric of a certain rank as well, has to be an ayatollah. But there is no immediate successor here. And that is partly by design because he also didn't want anyone to challenge his authority while he was alive. I think the next supreme Leader is going to be a person that has a much more ceremonial role in Iran. I think we'll see more sort of a collective leadership working behind the scenes. It's a lot of people and it's a lot of different bodies. It's clerical bodies. It's also the military, especially the Revolutionary Guard, which is a political and economic behemoth. And all these people, we're talking hundreds of thousands of people who are either in the regime or dependent on the regime. So a regime change. Saw, for example, in Iraq, that would mean uprooting this whole structure in the system.

[B]

President Trump said last night that Iran's entire military command is gone, adding as well that many of them want to surrender. Those are Trump's words there. Do we see any indication of that, just at least in terms of the pace of attacks that we've been witnessing? Clearly, someone is making military decisions still, and a lot of them, yeah.

[A]

And I think, in brief, no, we're not seeing any signs of defections or people laying down arms yet. He is right that a lot of senior commanders have been killed in this wave of strikes, and a lot were killed last year during the war with Israel. I think 30 top commanders were killed last year. But that didn't slow the pace of Iran's retaliation. It didn't slow its ability to respond to Israeli strikes. And we've seen the same thing now. Iran is bombing almost every country in the Gulf. It's striking back against Israel. It's caused a few fatalities among US Soldiers. Question is, of course, how long it can keep this up. But it is designed, the Iranian system is designed to continue fighting even if top commanders are killed.

[B]

I've been speaking to Wall Street Journal correspondent Suna Rasmussen. Suna, thank you, as always.

[A]

Thanks for having me.

[B]

Coming up, we'll look at the market impact of the conflict, as some investors predict we could see $100 a barrel oil this week. That and the rest of the day's news after the break.

[A]

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[B]

Oil prices are surging as strikes on ships in and around the Strait of Hormuz have thrust one of the world's key chokepoints for energy into the crossfire. Natural gas prices have also jumped, and investors wary of a wider conflict in the Middle east are flocking to safe havens like gold and the dollar. Iranian officials and media have shared conflicting statements about whether Tehran intends to block sea traffic through the strait. But Dow Jones commodities reporter Julia Petroni says the uncertain is already having a major market impact.

[D]

20 million barrels of crude oil and refined products pass through this strait each day, meaning that even limited delays can have significant impacts for supply chains. Now, what we know is that Iran's Islamic Revolutionary Guard Corps has warned ships to avoid this passage. And this has obviously prompted many vessels to turn back and reroute. It's not just commodities. Container shipping companies, including Maersk Apocaloid, are rerouting vessels around the southern tip of Africa, trying to avoid the Suez Canal and the Strait of Ormus. We have other pipelines bypassing the strait, especially in Saudi Arabia and the uae. However, these cannot fully compensate for the strait's capacity in the event of a complete closure, so that would have a major, major impact for supply chains.

[B]

Should Iran shut the strait, several banks are predicting $100 a barrel oil could be in play, a type of price jump that would push up the cost of fuel for cars, power plants and more the world over. US Forces reportedly used Anthropics AI to coordinate airstrikes in Iran, defying a White House order to stop working with the company. The move underscores how deeply embedded the technology remains in military operations, in spite of growing tensions between the Pentagon and the tech firm. Anthropic CEO Dario Amade addressed the friction in an exclusive interview with CBS this weekend. We wanted to stand up for American values, and when we were threatened with Supply chain designation and Defense Production act, which are unprecedented intrusions into the private economy by the government, we exercised our classic First Amendment rights to speak up and disagree with the government. Despite the federal blacklist, anthropics AI bot Claude has surged to the top of the Apple App store, outperforming rivals ChatGPT and Google Gemini. The rise follows a public backlash against OpenAI after its recent government partnership. Meanwhile, Nvidia says it plans to release a new processor designed to help OpenAI and other customers to build faster and more efficient tools. People familiar with the details say the company is creating a system for so called inference computing, a form of processing that allows AI models to respond to queries and EV sales in China dropped sharply last month, highlighting a tough road ahead for Chinese carmakers after years of rapid growth growth and aggressive expansion. Sales of BYD vehicles, the world's biggest EV seller, were down 41% from a year earlier. The data comes ahead of one of the year's biggest policy events for China watchers. This week's National People's Congress is expected to approve a five year economic blueprint that will prioritize turning China into a technological superpower that can rival the US and that's it for what's news for this Monday morning. Today's show was produced by Hattie Moyer and Daniel Bock. Our supervising producer is Sandra Kilhoff and I'm Luke Vargas. For the Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.

[E]

This episode is sponsored by Morgan Stanley's Thoughts on the Market it can be difficult to stay up to date on the financial market in today's ever changing environment. With so much commentary at any given moment, it's hard to cut through the noise to gain quality, actionable insights. Morgan Stanley is here to help with their podcast Thoughts on the Market. Thoughts on the Market is your daily market snapshot covering trends across the global investment landscape and offering perspectives from Morgan Stanley's leading economists and strategists. It's one of the only daily podcasts providing real time commentary from a financial institution on the day's biggest question. And with Most episodes under 5 minutes long, market clarity can fit seamlessly into your daily routine. Staying informed has never been easier. Listen and subscribe to Thoughts on the Market on Spotify, Apple Podcasts, YouTube, or wherever you get your podcasts.