[ANALYSIS] US–Israel Launch Joint Strikes on Iran; Regional Escalation Underway

OVERVIEW The US and Israel launched a large-scale joint military operation against Iran on Saturday, 28 February, with explosions reported across Tehran shortly after 09:30 local time (06:00 GMT / 01:00 EST), and additional strikes confirmed in Isfahan, Qom, Karaj and Kermanshah. The operation — described by US President Trump as “major combat operations” — targeted Iranian nuclear, missile and senior government infrastructure. Israeli officials characterised the action as a “pre-emptive strike” to prevent Iran from obtaining nuclear weapons. President Trump's Truth Social video announcement hinted at, but fell short of explicitly stating an aim for regime change. President Trump framed the objective as eliminating imminent threats posed by Iran’s nuclear and ballistic missile programmes, while also publicly calling on Iranians to “take over your government.” Israeli PM Netanyahu confirmed the joint operation would continue “as long as needed.” Iran has launched immediate retaliatory missile and drone attacks against Israel and multiple US military installations across the Gulf. Regional airspace closures and widespread flight suspensions are now in effect. Multiple Gulf states, including the UAE, Qatar, Kuwait and Bahrain, activated air defence systems to intercept Iranian missiles. Escalation risk is materially elevated. At the time of writing, there is no clarity on whether negotiations will continue amid the current military escalation. DETAILSStrategic Shift Public messaging from both Washington and Jerusalem suggests objectives extend beyond infrastructure targeting and toward potential regime destabilisation. Iran has formally declared US bases and interests in the region “legitimate targets.” Regime & Infrastructure Targeting Strikes reportedly focused on: Nuclear-related infrastructure Ballistic missile facilities Ministries of Intelligence and Defence The Presidential compound Areas near the Supreme Leader’s office Israeli sources indicate senior leadership figures were targeted, including Supreme Leader Ayatollah Ali Khamenei and President Masoud Pezeshkian. Iranian media states both remain alive, with Khamenei reportedly relocated to a secure site. No confirmed deaths of top political leadership have been announced. Iranian Retaliation: Iran launched missiles and drones toward: Israel (interceptions reported over Jerusalem, Tel Aviv and Haifa) Bahrain (US Fifth Fleet facilities) Qatar (Al Udeid Air Base) UAE (Al Dhafra Air Base; civilian fatality reported in Abu Dhabi) Kuwait and Jordan (US-linked installations) The IRGC has warned that further retaliation will continue. Israel has activated Iron Dome and Arrow systems. Multiple countries have reported using their missile defence systems to intercept Iranian projectiles. US and allied forces have reportedly used Patriot and THAAD interceptors in the Gulf. CASUALTIES & IMPACTCasualty numbers remain fluid and unverified. Iran: Iranian state media reports fatalities following a strike on a girls’ school in Minab. Broader casualty estimates remain unclear. Israel: Civilian casualties and injuries reported following missile interceptions and impacts. Nationwide sirens and shelter orders remain active. UAE: One civilian confirmed dead in Abu Dhabi due to debris from intercepted missiles. US: No confirmed US military fatalities at the time of writing. Officials warn losses remain possible if operations continue. INTERNATIONAL RHETORIC EU: EU foreign policy leadership described the situation as “perilous” and called for the protection of civilians. UK: The UK confirmed it did not participate in the strikes and urged the avoidance of wider regional escalation. UK PM Starmer is chairing an emergency COBRA meeting. Saudi Arabia: Condemned Iranian retaliatory strikes on Gulf states as violations of sovereignty and pledged solidarity with affected neighbours. Russia: Condemned the US–Israeli strikes as reckless and destabilising. Indonesia: Offered mediation, signalling willingness to facilitate dialogue. WHAT TO WATCH1) Duration of Operations US officials indicate operations could last several days or longer. Both Washington and Jerusalem have signalled willingness to continue strikes. Iran has warned of sustained retaliation. 2) Escalation Risk Attempts by Iran to disrupt shipping in the Strait of Hormuz Activation of proxy groups across Lebanon, Syria, Iraq or Yemen Expanded missile exchanges Direct US casualties triggering deeper engagement 3) Diplomatic Impact Recent indirect US-Iran nuclear talks ended without agreement.  At the time of writing, there is no clarity on whether negotiations will continue amid the current military escalation. MARKET IMPLICATIONS Heightened risk premium in crude markets is likely, particularly given proximity to Gulf export infrastructure - Strait of Hormuz disruption remains the primary tail risk. Gold and US Treasuries are likely supported in early trade. Escalation and prospects of a lengthier war will likely weigh on risk assets.