Iranian Regime Faces 'Existential Moment of Truth' Warns Former US Ambassador

Hostilities between Israel and Iran entered a fourth day on Monday with no sign of easing, stoking fears of a wider war in the oil-rich region.

Iran fired several waves of drones and missiles over the last 24 hours, while Israel continued hitting the Islamic Republic’s capital, Tehran, killing one more senior military official.

Since Friday, 224 people have been killed in Iran, according to the government, which said most of the casualties were civilians. Iranian attacks killed 23 people in Israel, according to an official in Prime Minister Benjamin Netanyahu’s office, and injured more than 400.

The US consulate in central Tel Aviv sustained minor damage after an Iranian missile landed nearby, the ambassador to Israel, Mike Huckabee, said Monday. Many cars were crushed in the area of the city where the strike happened. Bulldozers were collecting debris.

Ambassador David Hale served as a Special Envoy for Middle East Peace, was former US Under Secretary of State and the former US Ambassador to Lebanon and Jordan. He gives his outlook for the Middle East region with anchors Haidi Stroud-Watts and Shery Ahn.

The exchange of missile salvos between Israel and Iran is the most serious escalation after years of shadow war. Analysts fear it might push the Middle East into a regional conflict, causing wider human loss and potentially disrupting energy flows and vital trade routes.

One missile landed near the US consulate in central Tel Aviv, causing minor material damages but no injuries to personnel, the ambassador to Israel, Mike Huckabee, said Monday. Many cars were crushed and buildings damaged in the area of the city where the strike happened.

For Iran, the showdown poses an existential dilemma. It can’t risk appearing weak, yet its options are shrinking. Proxy forces across the region, which regularly rallied to its support in the past, have been debilitated by Israeli action over the past 20 months. Hezbollah, the Lebanese militia the US and others designate as a terrorist group, is noticeably absent from the conflict and hasn’t signaled it will start attacks on Israel.

Tensions between the arch-enemies erupted into full-blown conflict on Friday, when Israel attacked Iranian military and nuclear sites, and killed several top generals and atomic scientists. Since then, it has achieved air superiority over large parts of Iran, including Tehran, and degraded the ability of the Islamic Republic to defend against its strikes.

Iran has countered by firing drones and ballistic missiles at the Jewish state. Israel believes Iran still has thousands of missiles left, according to National Security Adviser Tzachi Hanegbi, who spoke in an interview with the Army Radio.

US Treasuries fell due to concerns a surge in oil prices will fan inflation. Oil prices spiked in response to Israeli airstrikes and gains carried through to the Asian session before profit-taking took hold — Brent futures fell around 1% after spiking over 10% Friday. Traders pared bets on interest-rate cuts from the Federal Reserve, which holds its policy meeting this week.

The potential for disruption of key shipping routes is an important consideration for policymakers trying to forecast risks to inflation. Navigation signals from hundreds of vessels in the Strait of Hormuz and the Persian Gulf went awry over the weekend, forcing seafarers to rely on less precise mechanisms which increase the risk of collisions.

Market sentiment at the start of the week was less bearish, with analysts expecting attacks to subside in the near term.

“The market currently anticipates a limited conflict, though there is little indication that hostilities will end quickly,” said Jochen Stanzl, chief market analyst at CMC Markets.

Emerging market currencies and stocks clawed back some of the previous session’s steep losses and both European stocks and US futures posted small gains.

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