Iranian President Masoud Pezeshkian declared Iran is engaged in “full-scale war” with the United States, Israel, and Europe following President Trump’s explicit warnings of additional military strikes.
The statement came after Trump’s December 29 meeting with Israeli Prime Minister Benjamin Netanyahu at Mar-a-Lago, where he threatened to “knock the hell” out of Iran if it rebuilds nuclear or missile capabilities.
June Conflict Transformed Regional Dynamics
The current crisis stems from the devastating 12-day Israel-Iran war in June 2025, when Israeli and American forces struck over 100 targets across Iran.
The conflict killed between 1,060 and 1,190 Iranians, including senior military commanders and nuclear scientists, while destroying critical infrastructure and setting back Iran’s nuclear program by 18-24 months according to Pentagon assessments.
Tehran Promises “Decisive Response”
President Pezeshkian warned that Iran’s response to any new aggression would be “harsh and discouraging,” claiming Iranian military forces are now “stronger in terms of equipment and manpower” than before June.
Foreign Minister Abbas Araghchi invoked Iran’s right to self-defense under international law, threatening “decisive, overwhelming, and proportionate force” against further attacks.
Nuclear Program Concerns Intensify
Reports indicate Supreme Leader Ali Khamenei authorized development of miniaturized nuclear warheads in October 2025, reversing years of restraint following the June war.
The Italian Institute for International Political Studies reported that Khamenei approved compact warhead design while stopping short of ordering uranium enrichment beyond current 60% levels, prioritizing weaponization over vulnerable enrichment activities.
IAEA Loses Verification Capability
Iran suspended cooperation with the International Atomic Energy Agency after the June conflict, refusing inspections and declining to account for enriched uranium stockpiles.
IAEA Director General Rafael Grossi warned in December that the agency is losing ability to verify Iran’s program remains peaceful or confirm material hasn’t been diverted to undisclosed locations.
Iran Accumulates Weapons-Grade Material
The IAEA reported Iran possessed over 408 kilograms of uranium enriched to 60% purity as of May 2025—sufficient for multiple nuclear weapons if further enriched.
Intelligence assessments suggest Iran moved significant quantities to undisclosed locations, possibly in deeply buried facilities at Isfahan, before U.S. strikes. Iran also activated a third uranium enrichment site at an undisclosed “secure and invulnerable” location.
Missile Arsenal Rapidly Reconstituted
Israeli officials confirmed Iran prioritized restoring ballistic missile production capacity over nuclear program reconstruction, currently possessing approximately 2,000 missiles—roughly equivalent to pre-war levels.
Western diplomats identified missile reconstitution as Iran’s “top priority,” reflecting Tehran’s calculation that ballistic missiles represent a more immediately achievable deterrent than nuclear weapons despite demonstrated limitations.
Economic Collapse Sparks Widespread Protests
Iran’s currency collapsed to a record low of 1.42-1.45 million rials per dollar in late December, while inflation surged to 42.2% with food prices rising 72% year-over-year.
The crisis sparked the largest protests since 2022, beginning with Tehran’s Grand Bazaar shopkeepers and spreading to at least ten universities across multiple cities.
Government Responds with Force
Security forces deployed tear gas in Tehran, Hamadan, and Malard, with reports of live fire against protesters in Hamadan.
Iran’s prosecutor general pledged a “decisive response” if protests destabilize the country, warning that efforts to transform economic demonstrations into “insecurity” or “destruction of public property” would be met with legal and proportionate action.
UN Sanctions Snapback Deepens Crisis
The United Nations reimposed comprehensive sanctions on Iran in September 2025 through the “snapback” mechanism after France, Germany, and the United Kingdom triggered the process.
The measures reactivated asset freezes on 121 individuals and entities, arms embargos, restrictions on ballistic missile development, and controls on uranium enrichment activities.
Diplomatic Channels Remain Open
Foreign Minister Araghchi appealed directly to President Trump to resist Israeli pressure and “seize a narrow diplomatic opening,” emphasizing Iran remains open to negotiations “built on mutual respect.”
Iranian officials confirmed communication with U.S. Special Envoy Steve Witkoff continues through Swiss Embassy channels, though fundamental disagreements over uranium enrichment rights persist.
Gulf States Navigate Delicate Balance
Gulf Cooperation Council members condemned Israeli strikes in June while carefully maintaining security partnerships with Washington and economic engagement with Tehran.
All GCC states made clear they will not facilitate Israeli or American military operations against Iran, fearing regional escalation could devastate their economic ambitions and expose them to Iranian retaliation.
China and Russia Provide Support
China emerged as Tehran’s primary defense partner, providing missile components, scientific expertise, and intelligence support to accelerate post-war reconstitution.
Russia provides diplomatic cover while contesting the validity of UN sanctions snapback, arguing the United States forfeited rights under Resolution 2231 after withdrawing from the nuclear agreement in 2018.
Oil Markets Remain Surprisingly Calm
Despite escalating tensions, oil prices remained muted with Brent crude trading near $61-62 per barrel in late December—down approximately 15-18% for the year.
Analysts attribute subdued responses to expectations of sustained global oversupply, elevated inventories, and assessment that Iran’s already-constrained production limits marginal impact from additional disruptions.
Escalation Risk Remains Elevated
Multiple analytical institutions assess elevated risk of renewed military confrontation through mid-2026, with Israel facing strategic incentives to strike before Iranian defenses and missile stockpiles fully reconstitute.
The convergence of economic crisis, domestic protests, military reconstitution, and nuclear program advancement creates volatile conditions where miscalculation could trigger broader regional conflict with unpredictable global consequences.
Sources:
“Iran warns of ‘severe’ response in wake of Trump’s new strikes threat.” Al Jazeera, 30 Dec 2025.
“Iran leader says country in ‘full-fledged’ war with US, Israel, Europe.” Defense News, 29 Dec 2025.
“Iran president declares ‘full-fledged war’ with US, Israel and Europe.” JURIST, 28 Dec 2025.
“Casualties of the Iran–Israel war.” Wikipedia, 21 Jun 2025.
“Trump, Netanyahu meet to discuss Gaza deal, Iran.” Deutsche Welle, 29 Dec 2025.
“Iran’s currency collapse sparks second day of trader protests.” Euronews, 28 Dec 2025.