Key takeaways:
An Israeli air strike eliminated Hezbollah’s top military commander, Fuad Shukr, in Beirut on 30 July 2024.
On 31 July 2024, a "short-range projectile" explosion at an Islamic Revolutionary Guard Corps (IRGC)-run guest house in Tehran killed Hamas political bureau chief Ismail Haniyeh, according to Iranian state media. Subsequent reports suggest Israeli intelligence planted an explosive in Haniyeh’s quarters.
Iran blames Israel for the death of Haniyeh and accuses the US of involvement, vowing retribution. However, Israeli sources have not claimed responsibility or commented on the method. The Islamic Republic News Agency (IRNA) denies a pre-planted explosive was used, possibly due to embarrassment over security lapses.
Iran and Hezbollah are likely to coordinate retaliatory strikes on Israel in the short term. However, Iran will probably seek to avoid an all-out conflict with Israel that could lead to direct US involvement.
Such escalation will probably impact international oil and gas markets – possibly including Israeli gas production – and further threaten commercial maritime shipping in the region, which in turn will impact global prices and supply chains due to increased costs and longer routes. Travel and tourism in the Middle East will also likely see a sharp decline.
Although the targeted killings of two senior terrorist group leaders within 24 hours threatens to spark a regional conflict, KSG assesses that any direct retaliation by Tehran will be short-lived. Tehran, doubtless embarrassed by the death of Haniyeh and the violation of its sovereignty the day after the presidential inauguration, will almost certainly respond in the coming days. KSG assesses that the Iranian regime does not want to be drawn into a direct conflict with Israel or the US. However, Tehran is likely to support strong responses by both Hezbollah and the Yemeni Houthis.
Hezbollah is likely to launch sustained attacks deeper into Israel in response to the killing of Shukr. Hezbollah has thousands of unguided battlefield rockets and guided missiles with the range and capability to reach deeper into Israel than they have to date. However, the group will likely restrict attacks to military targets and try to avoid civilian casualties to limit Israel’s response.
According to an official Israeli Defense Force (IDF) press release, Israeli Air Force jets struck Fuad Shukr’s location in Beirut on 30 July. The strike was in retaliation for the rocket attack on the Druze village of Majdal Shams in northern Israel, which killed 12 children three days earlier. Israeli authorities blamed the attack on Hezbollah, although the group denied involvement. Shukr was widely regarded as the right hand of Hezbollah leader Hassan Nasrallah, and was responsible for directing the group's military operations against Israel.
Haniyeh’s death is likely to halt negotiations for a cease-fire in Gaza at least temporarily. The Hamas political bureau chief was the group’s lead negotiator in talks that were taking place in Qatar. The two sides had been unable, or unwilling, to agree to a cease-fire and the release of hostages held by Hamas since the conflict began, despite protracted negotiations. Hamas’ ability to respond militarily is in doubt given the group remains heavily engaged with the IDF in Gaza.
The Iranian government publicly blamed Israel for the death of Haniyeh and almost certainly desires a strong response, but is likely to calculate its actions to avoid an even greater reaction from Jerusalem. Iranian Supreme Leader Ayatollah Khamenei vowed harsh retaliation against Israel, saying that “revenge is our duty”.
Iran on April 13, 2024, attacked Israel with over 300 missiles and drones in response to an Israeli attack on its consulate in Syria that killed a senior IRGC officer. Israeli and US defenses intercepted the vast majority of those weapons. Iran in that case did not follow-up with additional attacks.
Tehran is clearly embarrassed by the killing of a visiting official under government protection (to attend the inauguration of Iranian President Masoud Pezeshkian on 30 July) on its soil, but it is difficult to imagine the regime undertaking a larger barrage than the attacks in April, particularly when those were unsuccessful. Although Tehran is likely to launch at least token, direct long-range attacks for publicity purposes, it will probably coordinate a sustained campaign via its proxies in the region.
Alternately, Tehran may see an opportunity to test the resilience of Israeli and US defensive capabilities, which, while successful to date, have been significantly strained in countering Houthi attacks in the Red Sea, the April strikes by Iran, and continued rocket attacks by Hamas and Hezbollah.
Jerusalem has not claimed responsibility for the attack on Haniyeh, and Israeli Prime Minister Benjamin Netanyahu vowed that Israel would respond forcefully to any reprisal attacks. The IDF carried out a long-range air strike on the Houthi-controlled port of Hodeida, Yemen, the day following a Houthi drone strike that killed one Israeli citizen in Tel Aviv.
US Secretary of State Anthony Blinken stated in an interview on 31 July that the US had no involvement or prior knowledge of the strikes. He also stated that the US would continue to push for a cease-fire in the Gaza conflict and the release of the hostages, including several US citizens, and to attempt to prevent the conflict from escalating further across the region.
Additionally, a State Department spokesman at a regular press briefing on 31 July declined to speculate on the impact of the killings on the cease-fire talks and the possible reactions by regional states. He continued to emphasize the importance of achieving a cease-fire in Gaza, the release of the hostages, and the delivery of humanitarian aid to the Palestinian people.
The US administration is likely to try to restrain the reactions of both sides and to continue pressing for a cease-fire and release of the hostages. However, KSG assesses that there will be at least a long pause in negotiations while Hamas regroups and identifies a replacement for Haniyeh, and while Iran and Hezbollah calibrate their reactions to the strikes.
Looking Forward
KSG assesses that Iran is likely to retaliate against Israel directly in the near term, possibly through long-range missile and drone strikes. However, Tehran is expected to avoid an escalation that would cause a full-blown war with Israel, one which could draw in the US. Furthermore, KSG assesses that Hezbollah, with Iranian support, is likely to conduct deeper, sustained strikes against Israel, but will seek to avoid civilian casualties by targeting military installations and critical infrastructure such as port and gas facilities. These operations will be coordinated with continued strikes by the Houthis on Red Sea shipping and Israel directly.
KSG assesses that an initial spike in crude oil and natural gas prices is likely in the event of increased hostilities. Both Iranian and Iraqi oil production will be affected, as will shipping via the Straits of Hormuz and the Red Sea.
KSG previously assessed that Hezbollah can target Israeli offshore and onshore natural gas facilities. The group could choose to strike such targets as a means of impacting the Israeli economy with minimal civilian casualties. While Israel probably has sufficient fuel reserves to sustain operations over the near to medium term, significant damage coupled with threats to shipping could raise prices and cause shortages over a longer period.
KSG assesses that continued Houthi attacks on commercial shipping in the Red Sea, possibly coupled with US or international sanctions on Iranian oil, or even restrictions on shipping via the Straits of Hormuz, will continue to divert shipping via the Cape of Good Hope and raise costs and insurance rates, which will affect the global supply chain.
Travel and tourism have already been affected by airlines cancelling service and rerouting flights to/through both Israel and Lebanon. This is likely to continue in the event of escalation, and could also affect other regional states, such as Egypt and Jordan, that are heavily dependent on the tourist trade.
By Bruce Woodyard, MENA Analyst