US ‘Teetering on All-Out War’ With Iran After Troop Deaths: WaPo

The Washington Post is reporting that the United States is on the brink of an all-out war with Iran, with strikes and counterstrikes escalating across the Middle East. For markets, the tape now runs through oil, defense, and safe-haven flows.

What WaPo is reporting

The United States and Iran moved closer to all-out war over the weekend, as the exchange of attacks on civilian and military structures continued to escalate and with at least three and possibly four U.S. service members killed since hostilities resumed.

The Pentagon is increasing the number of military aircraft in the Middle East. However, a US official cautioned that the expansion of operations would be limited by dwindling stockpiles of air defense and long-range munitions, as well as constraints on the ability to surge more troops and aircraft into the area because of battle damage.

“We do not have enough to safely sustain operations,” the official pointed out.

How the ceasefire collapsed

The latest escalation in US-Iran tensions began on July 8, when the United States carried out strikes on Iran for the first time since Washington and Tehran signed a memorandum of understanding. The US claimed the attack was in retaliation for a strike on a commercial vessel in the Strait of Hormuz.

US President Donald Trump announced the same day that the ceasefire with Iran was over. Tehran responded by targeting US facilities across the Middle East, including in Bahrain, Kuwait, the United Arab Emirates, Qatar and Jordan.

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Oil is already moving

The IRGC reported an attack on the Al-Salem airbase in Kuwait, destroying an American radar station and an MQ-9 hangar. At the same time, the Iranians attacked an oil tanker in the Strait of Hormuz, and the price of Brent has already exceeded $90 per barrel.

Any sustained disruption to Hormuz shipping is the single biggest risk premium in crude, and traders should expect volatility to stay elevated while the exchange continues.

What to watch next

Observers will be monitoring further military developments and diplomatic responses from both the U.S. and Iran. Any announcements from President Trump or Iranian officials could provide key indicators of the conflict’s trajectory. Additionally, reactions from international mediators, such as Qatar and Pakistan, may influence market perceptions of a potential resolution.

Follow further coverage in other news as headlines cross.

Options market and stocks to watch

Watch for oil-linked and defense names to remain in focus while the conflict escalates:

• XOM and CVX: watch for continued bid on integrated majors as Brent trades above $90.
• USO: watch for flow tied to any Strait of Hormuz shipping headlines.
• LMT and RTX: watch for defense flow given the Pentagon’s reported munitions and air defense constraints.
• SPY: watch for broader risk-off tape if escalation continues into the week.

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