• Trump acknowledges Iran retains limited but real ability to strike back after U.S. and Israeli attacks.
  • Oil price volatility and shipping insurance costs rise as Gulf security fears persist.
  • Analysts see continued brinkmanship, with diplomatic channels still open despite bellicose rhetoric.

President Donald Trump’s comment that “Iran still has a little capacity to retaliate” underscores the administration’s assessment that, while degraded, Tehran’s armed and economic levers remain viable. The remark, made amid heightened U.S.–Iran tensions tied to Iran’s nuclear program and protests inside Iran, comes after U.S. and Israeli forces struck nuclear-related sites in mid-2025.

According to people familiar with the matter, those strikes significantly set back but did not eliminate Iran’s ability to assemble weapon-grade material. Iran has since vowed “unprecedented” retaliation for any fresh attack and has signaled that U.S. bases and assets in the Gulf remain within missile range. Trump has paired such warnings with claims that Iran is in “serious discussions” with the U.S., suggesting a mix of pressure and cautious diplomacy.

The renewed threat of conflict has already rattled markets. Oil prices have swung wildly, and freight-insurance costs in the Persian Gulf and Strait of Hormuz—key transit routes for global oil—have jumped. European and Asian equities have experienced risk-off sentiment, particularly in shipping, energy, and defense-related sectors. Iran’s economy remains under severe U.S.-led sanctions, limiting its ability to finance large-scale military expansion but still enabling it to fund proxies in Lebanon, Syria, Yemen, and Iraq.

“Without a deal, the region could slide into a war that cuts energy flows and destabilizes fragile governments,” said a Gulf-based analyst. European allies and Gulf states have urged de-escalation, while Israel continues to threaten strikes on Iranian targets and warns against advanced weapons transfers to groups like Hamas or Hezbollah.

Inside Iran, hard-liners have used the external threat to consolidate support, while protesters and reform-minded citizens fear crisis-driven repression. U.S. service members and contractors in the Gulf face heightened security alerts. Efforts to reach the White House for further comment were not immediately successful.

Correction: An earlier version of this article misstated the timing of the Israeli-Iran conflict. It occurred in mid-2025, not early 2025.