Making sense of Israel’s strikes on Iran
until midnight NYC time.
This article was collaboratively written by: Nuño Sempere, Brian Yu, Kati Conen, Alex Lyzhov, Jaeho Lee and 30+ other contributors. Those of us who are in the US are going to sleep, but the document continues being available and freely editable here, and by the time US readers wake up many new developments may have arisen.
Last week, the IAEA found Iran in non-compliance for the first time in 20 years. The previous day saw an escalation of tensions and a breakdown of dialogue around the nuclear programme.
Today, Israel struck Iran, with known sites being Tabriz, Tehran, Natanz, Kermanshah, Arak, Isfahan, Sanandaj, Ilam, Ahvaz (provincial capital of Khuzestan, Iran’s oil-producing province), Chazabeh border crossing in Khuzestan. Israel has aimed for both Iran’s nuclear program and its leadership.
Although this is a greatly escalatory step, our sense is that this will play out over the next several hours, days, weeks, or months, not over minutes, because Iran will need time to organize its response–and because the Iranian regime could be fighting for its very existence. At 11:18 PM ET, N12 News Israel reported an official is preparing for Iranian response in 2 hours.
Polymarket is at 19% that Iran will acquire a nuke in 2025 though this market might not be that reliable since only a few people have traded on it and it’s low liquidity (also, Iran’s government claiming it has a nuke is one of the accepted resolution criteria—its incentives to do so are affected by this current situation). Some other prediction markets have traded this probability down after today’s strikes. Nonetheless, conditional on Iran getting a nuke, it seems more likely they will do it sooner rather than later, since Israel is trying to stop them (though there are also some unlikely scenarios in which Israel is weakened).
The NYT is reporting that the commander in chief of Iran’s Revolutionary Guards Corps, Hossein Salami, was killed. So have the deputy commander of Iran’s armed forces and at least one nuclear scientist. The Iranians are confirming that second-in-command Bagheri has also been killed. As of 7:11 AM (Iran time), NYT is reporting that Hadassah Medical Center is “sending non-essential patients home in preparation for retaliatory strikes”. Reuters reports that Khamenei is alive. Information is in flux.
Likely developments
If Iran retaliates, as it seems wont to do, it will probably do so with missiles and drones. This article outlines some possible responses: choking global oil supplies, cyber warfare, usage of proxies, and possibly a nuclear response. As for military context, per Al Jazeera, Israel and Iran have comparable numbers of combat-capable aircraft and attack helicopters.
Previous Iranian retaliation was ballistic missiles. Our collaborators guess that the degree of sophistication of the drones used in the counter-attack is ratcheted up a notch from the operation 8-ish months ago. But Israel knows that and is probably prepared. The NYT reports that an Iranian spokesperson says retaliation is definite, “God-willing,” and that Israel and US will receive a “forceful slap”. It is unclear whether such language is intentionally signaling a modest, de-escalatory response, or if something has gotten lost in translation. Later statements appear more resolute: “The response of the Armed Forces will be crushing and regrettable.”
Rubio’s initial remarks were silent on whether the US would provide Israel support in defending retaliatory strikes, and generally framed in such a way as to cast doubt on US support. This seems very defensively framed, so as to clearly prevent Iranian strikes against American forces: “Let me be clear: Iran should not target U.S. interests or personnel” is the last sentence. Yet it still implies that they were made aware in advance “Israel advised us that they believe this action was necessary for its self-defense.” In later updates, Israeli Official to 'Post': 'There was full and complete coordination with the Americans' - “We presented the American administration with evidence of Iran's breakthrough toward a nuclear bomb. There was full and complete coordination with the Americans.” As of 04:05 GMT, from Iran’s Foreign Ministry according to Al Jazeera: “The Zionist regime’s aggressive actions against Iran cannot have been carried out without the coordination and authorization of the United States. Accordingly, the United States government, as the main supporter of this regime, will also be responsible for the dangerous effects and consequences of the Zionist regime’s adventure.”
Iran might also be able to choke the global oil supply. As of 10:48 PM ET time, Brent crude oil had risen 12.69%. If Iran and its proxies are able to block the strait of Hormuz, this blocks oil from Gulf States, and Saudi Arabia. They are probably able to do this if they direct drones at oil tankers. We are unclear on how dependent the US is on this in the short term—it’s energy independent and it has been filling up its oil reserves recently. It might also affect other countries who are too oil dependent.
The most escalatory step would be nuclear retaliation, either by attacking Israel’s nuclear program with conventional weapons, or with a nuclear weapons if Iran indeed has or is able to create a nuclear weapon. Yesterday, the Institute for the Study of War reported:
> IRGC-affiliated media claimed on June 10 that Israeli secret nuclear facilities are "within range" of the Iranian armed forces and that Iran could destroy them with “hundreds of ballistic missiles” with a single order.[22] The Iranian Supreme National Security Council (SNSC) similarly threatened on June 9 to target Israeli secret nuclear facilities and claimed that Iran has obtained sensitive intelligence that it could use to strike those sites if Israel attacked Iranian nuclear facilities.[23]
Iran and its proxies’ cyberwarfare capabilities are uncertain. They previously made malware rewriting Israeli-made programmable logic controllers used for water and gas systems (used in the US), cloud credential theft, and wipers, ransomware deployments detected in Israel over the last couple of years. Ultimately, they are probably far behind the US and Israel, maybe on par with Turkiye. (Comparable to NK, Pakistan). Iran also has a history of attacking industrial control systems, though mostly in the US (e.g. Bowman Dam). In contrast, Mossad has powerful cyber and espionage capabilities (Stuxnet, Hezbollah pagers, etc.). It’s unclear how the defense/offense balance will look like, but overall Israel seems more capable.
Use of proxies might not only fall in the above categories.
Will Netanyahu be out of power, or will there be a rally around the flag effect? It's probably a rally around the flag situation. Netanyahu will only fall if Iran goes to war with Israel and the US does not support them with troops. Bibi had an internal win yesterday. His power is as stable as it gets. Government cannot be disbanded for 6mo, and Israel will hold elections afterwards anyway. On the other hand, Netanyahu may have alienated the Trump administration, and may have to go for Israel to improve its relationship with its most powerful ally.
As of 7:15 AM Iran Time, the IRGC has vowed “severe and regretful revenge” according to IranWire.
Markets and Prediction Markets
Here are some prediction markets on the topic:
Iran strike on Israel in June? 94% [kinda boring]
And here some quickly found relevant markets:
There’s some rebound
Nikkei 225 (Japanese markets open now):
Brent crude oil futures
WTI crude oil futures
At US market open tomorrow, there might be domains where implications will take a bit to develop, and so trading might be profitable on topics such as: American companies exposed to the Middle East, alternatives to oil (natural gas companies in the US), possibly Ukrainian stocks might go up, since Iran was providing drones to Russia. Israel stocks and currency may go down, since it is now embroiled in a war, or up if it decisively wins.
Live questions
How many missiles will they launch, how soon will they launch them, how long will their retaliation last, where in Israel – and elsewhere – will they target, and how many missiles will get through? Iran will (attempt to) genuinely strike Israel now, because Israel is genuinely striking them. These are no longer warning shots over the bow.
What is Israel’s endgame here? What happens to the Iranian regime? They reportedly got the head of the IRGC, Hossein Salami, and the Chief of Staff of the Armed Forces of the Islamic Republic of Iran, Mohammed Bagheri. Going for regime change might make sense as Israel’s end game. Will the Iran regime fall? Mosque attendance was already falling, to the extent that Iran had to close Mosques. The Polymarket market for Khameini out as leader of Iran this year is up to 36%. It’s unclear who might be the likeliest successor, but the successor of the Shah of Iran is alive, kicking, and supportive of Israel.
At this point, Iran’s nuclear program and diplomatic stance seems like a major miscalculation. Their internal logic was probably “nukes or bust”. But are we missing some information? Or was the Israeli paranoia and willingness to strike viz Iran’s need to get a nuclear weapon a loopy self-fulfilling prophecy?
Iran-adjacent groups also have this deep pride culture that has led them to do irrational power demonstration moves in the past. See this instance where a Hezbollah leader revealed for no reason that they had access to Israel drones transmission channels.
Here are some further questions, or the sort that people might want to operationalize and added to a prediction market, or simply ponder.
Will US-Iran talks happen on Sunday 15th in Oman?
Ayatollah Khamenei in office on July 12th?
Will Israel strike Iran during the period 15th Sunday to 22nd Sunday?
US military action against Iran before July?
Will the US announce additional military aid to Israel by 22nd Sunday?
Will Iran attack US forces by 22nd Sunday, with at least 1 fatality?
Why hasn’t Iran responded yet? Command chain might be damaged; they might still be thinking about it; they might want to figure out extent of US involvement/non-involvement
Will Iran attack US forces/installations?
What’s the scale of Israel’s strike? What was targeted?
How long was it planned for? Comment: I don't think this really makes sense. Plans are always kept. A more interesting question is when was the decision made.
Will there be more than 1,000 deaths due to Israel-Iran conflict from 12th June to 12th September?
Will the US government make a statement criticizing the strikes by Sunday 22nd June?
Has Israel hit Iran with significant cyberattacks?
When will the strikes by Israel end? (hard to operationalize)
Will there be an attack on an Israeli embassy where at least one person dies in an attack attributed to Iran by July 12?
Will Iran’s Fordow nuclear research site be attacked? It is known that Natanz has been attacked, but Fordow is fortified deep underground
Will the United States withdraw an aircraft carrier from the region by July 12?
Will the US break or loosen ties with Israel?
Will Reza Pahlavi, the former crown prince of Iran, be a member of the Iranian government by July 12?
Will a nuclear weapon be detonated in the Middle East by December 31? (includes tests/demonstrations)
Will Iran no longer be an Islamic Republic on July 12 or December 31?
On January 1, 2026, will Masoud Pezeshkian be the most powerful leader of Iran?
Worst-case scenarios
It seems unlikely that Iran will nuke Israel. The country doesn't have this capability and probably won't for the duration of this crisis. If Iran had this capability already, Israel would not have conducted these strikes. Even if Iran has nukes, it seems implausible that this would be a first-level escalation (barring, say, the Ayatollah and entire senior leadership being assassinated or something).
On the other hand, if thinking about worst-case scenarios, nuclear war is near the top. Preliminary reports suggest that Israel attempted to kill high-ranking officials with precise missiles (link). That pushes towards the end goal being to make the regime fall or effectively harmless (similar to the strategy against Hezbollah). If that is the case, Iran’s political elite will be fighting for its survival, making the fight existential for them and thus increasing the chances of a nuke strike.
Again when thinking about worst-case scenarios, we might want to consider the path to WW3. This might involve China and Russia joining in, or the rest of the Arab world. However, Russia has its hands full at the moment and is unlikely to devote energy to this front. Iran has shockingly few allies at the moment, and is an enemy of nearly every major player in the region, especially given the collapse of military capabilities of Hezbollah, Houthis, and Syria.
Still, a possible path to WW3 could go through the Houthis. Iran massively empowers houthis to stop global shipment. China supports, including against US shipments. The US escalates. According to a NYT analysis, China is Iran’s biggest oil purchaser, and Iranian oil exports to China account for 6% of Iran’s entire economy. However, China has built up a strategic oil reserve which would take weeks to deplete. Yet Europe would condemn China strongly.
Separately, if the US dedicates more military resources to the Middle East, particularly naval power and precision munitions, it may increase the likelihood that China sees an opportunistic moment to act against Taiwan, leading to potentially escalating conflict there.
In the meantime, the Trump administration is seeking to enact its agenda globally and locally. It might use the collapse or weakness of Iran to pressure Russia to make peace with Ukraine.
International Reactions
It is unclear how the Arab world will react, and in particular whether and how strongly Saudi Arabia and OPEC will condemn the strikes.
Saudi Arabia’s main oil fields are located in the east of the nation, and therefore would have to go through the Strait of Hormuz. However, the Saudis have been preparing for this by constructing a pipeline system that would allow oil to be transported from the Red Sea instead, bypassing Iran. This is another potential target for Iran. In 2019, the Iranian-backed Houthis attacked this pipeline system with drones.
The IAEA has confirmed Natanz nuclear enrichment facility has been damaged in the attacks.
By 10pm PT Egypt issued a strong statement condemning the strikes but didn't see anything from other countries.
By 11:31 ET, Jordan reacts negatively - spokesman Momani says Jordan “will not allow its airspace to be violated”. Up to interpretation, but seeing as airspace was violated twice already last year, unlikely that concrete action will be taken
As of 11:36ET, UN Secretary-General Guterres has condemned the “military escalation” by Israel in the Middle East - AP News
China simply warning its citizens to prepare for potential counterattacks.
Possible actions
Beyond participating in markets, it’s unclear what actions to recommend. Some brainstormed options are:
Get people outside Israel or Iran, if they seem like they will join a protracted war.
Influence the European Union to strongly condemn strikes against oil refineries/shipments/etc.
Make questions on Manifold/Polymarket?
If collaborators come up with sensible permissionless actions that would take less than or around $100K, Sentinel might be willing to take them.
Organizations like ALLFED prepare for nuclear war. They might be mobilized.
You can contribute to a live doc with brainstorms here.
What are some good signals that were right/are useful to look at
Polymarket identified the possibility
OSINT accounts on Twitter and Polymarket were much faster than mainstream media at identifying and processing information.
U.S. Actions before strikes indicated their possibility: The US government clearly telegraphed it by pulling embassy staff from Iraq and calling for voluntary evacuations of nonessential embassy personnel and family members from nearby countries.
Huckabee tweeted thirty minutes before first strike, “At our Embassy in Jerusalem and closely following the situation. We will remain here all night. Pray for the peace of Jerusalem!”
Sentinel forecaster Belikewater clearly called it beforehand.
License for this doc: MIT.
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Excellent and fast. For future reference oil price moves beyond just fixed price change can convey a lot more information if you dig deeper.
"It might use the collapse or weakness of Iran to pressure Russia to make peace with Iran."
Come again?