A busy reporting period, where we are seeing an ineffectual second Iranian missile barrage on Israel. With the deaths of Nasrallah and all viable successors as leaders of Hezbollah, and Hamas severely depleted, Iran’s key proxies are neutralised. In the eyes of many of the Islamic Republic’s adversaries, this is a unique opportunity to strike it a significant strategic blow.
Iran’s precarious position. Following the pager and handheld radio attacks on Hezbollah, Israel killed Hassan Nasrallah in Beirut. This piled further pressure on the militant group through airstrikes and a ground assault into southern Lebanon. This caused Iran to retaliate, launching nearly 200 missiles at Israel overnight; 1st/2nd October. These missiles mainly targeted military installations and resulted in only limited infrastructure damage and no reported Israeli casualties. This is embarrassing for Iran and places it in a precarious situation. Hezbollah, Tehran’s strongest proxy in the region, and its main deterrent against Israel, is being systematically dismantled by Israeli forces.
Supreme Leader Ali Khamenei faced a difficult choice: inaction would signal weakness, but a major retaliatory strike risked drawing the US directly into the conflict, which could result in severe damage to Iran’s military, infrastructure, and nuclear assets. In response, as it did in April, Iran opted for a calculated move. Back in April, Iran launched 300 drones, cruise, and ballistic missiles at military targets, with prior warning to the US. This time, Iran fired 180 ballistic missiles at both military and civilian targets, notifying the US only half a day in advance.
In both instances, Iran framed its strikes as direct retaliation for Israeli actions. April’s attack was in response to an Israeli strike on Iran’s embassy in Damascus, which killed an IRGC commander. This most recent strike followed the assassinations of Hamas leader Ismail Haniyeh in Tehran and Nasrallah’s. Iran emphasized that these attacks marked the full extent of its retaliation and warned of significant escalation should Israel strike Iran again.
Prime Minister Benjamin Netanyahu, now more empowered than at any time since Oct 7th 2023, addressed the Iranian people directly, suggesting their regime’s time is running out. Meanwhile, Israeli hardliners in government, and notable republicans in the US, including Donald Trump and his campaign, see this as a prime opportunity to push for strikes against Iran.
The Biden administration, keen to avoid further escalation, has been working to limit Israeli retaliatory strikes, aware that Netanyahu is interested in expanding the conflict with Iran and potentially drawing in the US directly. Biden has publicly opposed strikes on Iran’s nuclear facilities, (former President Trump has encouraged them,) and hypothesised publicly that striking oil infrastructure might not get his support… before tailing off.
Unlike Gaza or Lebanon, Israel’s ability to strike Iran is limited. Iran’s nuclear sites, such as Natanz, Fordow and the heavy water reactor at Arak, are deeply buried under granite, making them difficult to destroy. An Israeli air campaign would need to be large and sustained, with a high risk of aircraft losses to Iranian air defences. Even if successful, such an attack would only delay Iran’s nuclear ambitions, likely leading to an accelerated Iranian effort toward weaponization and further destabilization in the region.
Diplomacy intensifies. Intense diplomacy between Iran and GCC neighbours has been happening in the days since the Iranian attack on Israel as Iran tries to persuade KSA and others not to support an Israel counterattack (for example by allowing airspace access). Iran has reportedly informed its Arab and regional neighbours that they would face the consequences if their land or airspace is used for any attacks on Iranian soil. The region’s spare oil production capacity largely lies within these Gulf countries. Saudi Arabia, in particular, has remained cautious since the 2019 attack on its Abqaiq oil facility, which temporarily disrupted over 5% of global oil supplies. Although relations between Saudi Arabia and Iran have improved since 2023, concerns about the vulnerability of critical oil infrastructure persist. Iran has denied responsibility for the 2019 attack.
Dash for the bomb. Hardliner politicians have come out publicly supporting an accelerated effort to obtain a nuclear weapon; recent seismic activity in Semnan Province, reported as a 4.4/4.5 magnitude earthquake, sparked speculation on Persian-language social media; with some claiming it was a covert nuclear test. Ultra-hardliners and pro-establishment voices on platforms X and Telegram suggested that the tremor was proof of Iran’s pursuit of nuclear deterrence capabilities, celebrating the idea of Iran developing a nuclear weapon, calling it an “inalienable right” and urging authorities to take decisive steps towards building nuclear arms. Seismological experts and various social media users refuted the idea of a nuclear test, pointing out that the recorded depth and characteristics of the tremor were consistent with a natural earthquake. Officials denied the nuclear test claims.
How will Israel respond? 10 days after Iran’s missile barrage, Israel is yet to respond militarily. In addition to nuclear targets, Israel is likely to be considering a wide array of options. An aggressive and novel cyber response seems likely to support kinetic strikes. Look out for the following being hit, possibly in a multi-wave, multi-day counter-attack:
Ballistic missile facilities associated with the development, storage, and deployment of ballistic missiles at bases in Kermanshah, Mashhad, Al Ghadir and Khorramabad; missile production facilities owned by the Shahid Hemmat Industrial Group and Shahid Bakeri Industrial Group, both near Tehran, the Semnan Missile Test Site in northern Iran, and Parchin
Islamic Revolutionary Guard Corps (IRGC) headquarters and major bases in Tehran, Kermanshah, Mashhad and Shiraz, and the major Quds Force base in Ahvaz
Cyber warfare centres and military communications sites include:The Passive Defense Organization (Tehran); responsible for the coordination of Iran’s defensive cyber capabilities and efforts to protect critical infrastructure
IRGC Cyber Command in Tehran
Shahid Kaveh R&D Base (Tehran) whose activities include research and development of offensive cyber tools, including malware and cyber sabotage capabilities, supporting cyberattacks against foreign adversaries
Cyber Defense Command (under the Ministry of Intelligence and Security, Tehran)
Telecommunications Infrastructure Company (Tehran), responsible for Iran’s communications infrastructure. It plays a critical role in controlling and monitoring internet traffic, censorship and surveillance of domestic and international communications.
National Information Network (Tehran and key urban centres) supports Iran’s effort to build a domestic internet that can function independently from the global internet, allowing the government to exert greater control over internet access within the country. This is part of Iran’s defensive strategy to shield its communications from external cyberattacks while enabling greater control and censorship over domestic communications.
Oil infrastructure Kharg Island: Iran’s main oil export terminal, handling a significant portion of the country’s crude exports. Located in the Persian Gulf, a strike on Kharg Island could severely disrupt Iran’s oil exports, affecting its global oil revenue, raise international oil prices and provoke Iranian retaliation on GCC oil producers. The facilities on Kharg Island, including oil storage tanks and loading terminals, are vulnerable.
Abadan Refinery: one of the largest and oldest refineries in Iran. It processes a significant amount of Iran’s oil into various refined products. Disrupting operations here would hinder Iran’s ability to supply domestic and international markets with refined products like gasoline and jet fuel. Situated near the Persian Gulf, the refinery is accessible to air or missile strikes, and damage to this facility could lead to a domestic fuel crisis, as seen in 2019-20. This is likely to make it attractive to Israeli strategic planners if they consider further political destabilization in Iran to be an objective.
South Pars gas field and associated processing facilities: South Pars is the world’s largest natural gas field, shared between Iran and Qatar. Targeting the Iranian section of South Pars and its associated gas-processing facilities would disrupt both gas and condensate production, important for Iran’s export market.
Bandar Abbas refinery and port: One of Iran’s largest oil refining complexes, and the port nearby, serves as a crucial hub for the export of both crude oil and refined products. Disabling it would impact Iran’s ability to ship oil products and export to key buyers like China and India. Its systemic importance to China might give Israel pause for thought.
Rial. The Rial dropped 6%, ending the period at 627,000 IRR to the dollar on the black market.
Our last report ended on a note of relative optimism, with the flash of an olive branch by the Iranians at UNGA, five weeks feels like a long time ago. Israel is considering its response carefully. The clever response would be to cause just enough pain not to further alienate its biggest international backer. This leads our analysis toward the Israelis conducting a series of aggressive cyber-attacks on critical Iranian infrastructure and/or airstrikes on a combination of operational missile and IRGC bases, missile production sites and – crucially – domestic refining capacity at Abadan. Any Iranian response will depend on the targets hit:
By only concentrating on military targets, such as ballistic missile facilities and IRGC bases, Israel would invite another response in kind, possibly expanding to include ‘softer’ US bases in Iraq and Syria and encouraging the Houthis to increase the tempo of its operations.
If targets in central Tehran are successfully struck (causing further embarrassment and loss of technical capability), or major oil facilities are severely damaged (provoking domestic unrest and further economic pain), Iran will likely escalate. Unable to inflict similar damage on Israel, Iran would look for other means to respond; in these circumstances, critical infrastructure in GCC countries and US bases and ships in the Gulf become attractive, hardliner’s voices become louder and the imperative for the regime to rally the population around the flag increase.
Published: 14 October 2024