US and Saudi forces have conducted joint strikes on the Popular Mobilization Forces (PMF) in Iraq, targeting Iran-aligned militias in response to attacks on Saudi oil facilities. The operation marks a significant escalation in the region’s complex geopolitical landscape, where Iraq attempts to maintain relations with both Tehran and Washington. The joint airstrikes, which reportedly resulted in the deaths of at least 20 PMF members, were condemned by Baghdad as a breach of Iraqi sovereignty. These events underscore the ongoing Saudi-Iran proxy conflict playing out on Iraqi soil, as well as the broader implications for US-Iran relations.

Key Takeaways

• The joint US-Saudi strikes appear to be a significant regional escalation, suggesting heightened military engagement.
• Market pricing suggests participants may view this as increasing the likelihood of a US invasion of Iran.
• Baghdad’s condemnation of the strikes reflects the delicate balance Iraq maintains between Tehran and Washington.

What to Watch

Observers will be monitoring the reactions from Iran and the PMF, as any retaliatory actions could further escalate tensions. The response from the US and Saudi Arabia, as well as any diplomatic efforts by Iraq to mediate, will be crucial in shaping future developments. Additionally, market participants will likely pay close attention to any statements or actions from the Iranian government, which could influence the perceived probability of a US invasion of Iran.

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