People protest against the US and Israeli strikes on Iran, ICE immigration raids, and in support of Palestinians during a demonstration outside the Westwood Federal Building in the Westwood neighborhood of Los Angeles on June 22, 2025.
Bing Guan | Afp | Getty Images
The U.S.-Israel conflict with Iran is extending into its third day with each side doubling down on sharper responses in the days ahead, deepening fears of a wider war that could rattle the global economy.
Where things stand
Washington and Israel launched massive attacks on Iran on Saturday, killing the Islamic state’s Supreme Leader Ayatollah Ali Khamenei, triggering retaliatory strikes from Tehran.
Tehran has struck back with missiles and drones against Israel and Gulf countries that host U.S. military bases, including the United Arab Emirates, Qatar, Kuwait and Saudi Arabia.
Civilian infrastructures were also hit by Iran’s retaliatory strikes, including Dubai’s luxury hotel Fairmont The Palm and the Dubai International Airport.
The death of Khamenei, who ruled Iran for over three decades and held ultimate power, has raised the question of who will run Iran next as he had not publicly designated a successor. A council comprising Iranian President Masoud Pezeshkian, the judiciary head and a member of the Guardians Council, has temporarily assumed leadership duties on Sunday.
More than 200 people in Iran have been killed during the strikes, according to Iranian state media.
Three American service members have been killed and another five were seriously wounded, the U.S. military said on Sunday.
Market reaction so far
Crude oil prices jumped Monday morning as traders parsed risks of a drawn-out conflict and a major oil supply disruption.
U.S. crude oil rose more than 8%, or $5.55, to $72.57 per barrel while the global benchmark Brent jumped about 9%, or $6.54, to $79.41, before pairing gains.
WTI Crude (Apr’ 26)
Precious metals gold and silver climbed around 2% as investors flocked to the safe-haven assets amid global risk-off sentiment.
The U.S. dollar index was 0.26% higher at 97.863 as of 11:20 p.m. EST. The 10-year Treasury yield was little changed Monday at 3.97%, regaining some ground after falling to an 11-month low of 3.926% on Friday.
Risk assets are pulling back. Futures on the Dow Jones Industrial Average dropped 521 points, or 1%. S&P 500 futures lost 1% and Nasdaq 100 futures declined a little more than 1%.
Japan’s Nikkei 225 slipped 1.2%, while the Topix fell 1.34%. Hong Kong Hang Seng index opened 1.15% down, while mainland China’s CSI 300 was down 0.25%. Australia’s S&P/ASX 200 fell 0.48%.
De-escalation or spiraling tensions?
U.S. President Donald Trump has warned that there might be more American casualties as the operations unfold. Trump told the Daily Mail newspaper on Sunday that the conflict with Iran could go on for the next four weeks.
“It’s always been a four-week process. We figured it will be four weeks or so. It’s always been about a four-week process so — as strong as it is, it’s a big country, it’ll take four weeks — or less,” the British newspaper quoted Trump as saying.
Separately, in an interview with The Atlantic magazine, Trump said Iran’s new leadership wanted to resume negotiations and that he has agreed to talk to them.
“They want to talk, and I have agreed to talk, so I will be talking to them. They should have done it sooner. They should have given what was very practical and easy to do sooner. They waited too long,” Trump said, without specifying when the talks will be held.
Iran’s security chief Ali Larijani, however, rejected the prospects of resuming negotiation, saying that Tehran has no plans to engage in talks with the Trump administration.
“We will not negotiate with the United States,” the former adviser to the late supreme leader said in a post on X.
The U.S. strikes have sparked debate over their legal foundation as only the Congress has the right to declare war under the Constitution.
“There is no plausible legal justification for the U.S. attack on Iran,” said Brian Finucane, senior advisor at International Crisis Group, a Brussels-based think tank.
Congress has not authorized military action and the president is not acting to repel any sudden attack upon the U.S., he said.
“Even by the standards of unilateral executive military action of recent decades, President Trump’s unauthorized attack on Iran stands apart due to its scale and likely repercussions, including for U.S. forces in the region,” Finucane added.
U.S. lawmakers have also voiced concerns over a potentially prolonged and costly war in the Middle East.
Senator Tom Cotton, the Republican Chairman of the Senate Intelligence Committee from Arkansas, said on CBS News’ “Face the Nation,” that “there is no simple answer for what’s going to come next.”
“It’s no secret that this administration has no plan for the chaos that is unfolding right now in the Middle East,” said Senator Chris Murphy, a Connecticut Democrat.
Global reactions
The strikes on Iran and Tehran’s retaliation have prompted global leaders to assess the fallout, with Western leaders largely backing Trump, while China and Russia took aim at U.S. and Israel for their military operation.
China: In a phone call with his Russian counterpart, Chinese Foreign Minister Wang Yi said that it was “unacceptable for the U.S. and Israel to launch attacks against Iran … still less to blatantly assassinate a leader of a sovereign country and instigate regime change.” Wang reiterated Beijing’s call for an “immediate ceasefire” and an “earliest possible return to dialogue and negotiation.”
Russia: President Vladimir Putin reportedly expressed condolences over the death of Khamanei, calling the act “a murder committed in cynical violation of all norms of human morality and international law.” In a statement Saturday, Russian foreign ministry called for “an immediate return to a political and diplomatic track.”
Gulf states: The U.S.-aligned countries have put up a show of defiance, vowing in a joint statement to “stand united in defense of our citizens, sovereignty and territory, and reaffirm our right to delf-defense in the face of these attacks.”
European Union: Ursula von der Leyen, president of EU commission, appeared to support Trump’s push for a regime change in Iran, calling for a “credible transition” that could restore stability and reflect the “democratic aspirations of the brave people of Iran.”
Britain: The U.K. government said it had not participated in the strikes and did “not want to see further escalation into a wider regional conflict.” But London has agreed to let the U.S. use its military bases for “defensive” strikes on Iranian missile sites, according to Prime Minister Keir Starmer.
Australia: Prime Minister Anthony Albanese highlighted that Iran has been a “destabilizing force” for decades. “We support the United States acting to prevent Iran from obtaining a nuclear weapon and to prevent Iran continuing to threaten international peace and security,” he said in a statement.
Canada: Prime Minister Mark Carney also backed the U.S. action. “Canada supports the United States acting to prevent Iran from obtaining a nuclear weapon and to prevent its regime from further threatening international peace and security,” Carney said in a statement.
