Executive Summary
Iran’s increasing emphasis on precision-guided and hypersonic missile technology presents a challenge to US and Israeli air defence capabilities, with the potential for severe disruption to vital military and energy assets in the region.
Current strikes against the Haifa oil refinery and the closure of maritime routes because of the Strait of Hormuz’s blockade create severe economic volatility and disrupt global energy supplies. The depletion of high-tier interceptor stocks presents an immediate risk to regional military stability.
Key Takeaways
- Iran has transitioned from high-volume saturation to using precise, solid-fuel missiles to bypass sophisticated air defences.
- Stocks of Arrow 3 and THAAD interceptors are declining as the cost of defence exceeds the cost of Iranian munitions.
- Damage to the Haifa refinery and Israeli transport nodes proves Tehran’s ability to inflict direct economic costs through infrastructure destruction.
Background Information
- Since the beginning of the US-Israeli conflict with Iran on Saturday, 28 February 2026, Iran’s military operations have predominantly involved launching extensive missile volleys aimed at US facilities, allied forces across the Middle East, and key Israeli strategic targets.
- Following Israeli airstrikes on Iran’s South Pars gas field, Tehran has revised its strategy to emphasise targeted strikes on military and civilian strategic infrastructure to maximise damage.
- An examination of Tehran’s military assets reveals that the Islamic Republic can use advanced missile systems. These include, for instance, the Kheibar Shekan, a solid-fuel ballistic weapon capable of hypersonic speeds, the Hajj Kasim missile with a 500 kg payload, and the Sejjil missile, which can alter its trajectory mid-flight to evade detection. Technical improvements in the Amad and Ghadr families allow for strikes deep into territory with high precision.
- Recent attacks on the Bazan oil refinery in Haifa and vicinity of Ben Gurion Airport show Iran’s military capability and potential to inflict substantial damage on Israeli and US strategic assets in the region, particularly as over three weeks of conflict have depleted regional air defence systems.
- Washington and Tel Aviv have stated that Iran has lost approximately 70% of its mobile launcher array. However, Tehran maintains a retaliatory capability via hardened underground facilities.
- Iran has increased the use of cluster warheads to scatter submunitions and strain terminal air defences.
Why Does It Matter?
Tehran’s sophisticated use of precision munitions enables a significantly heightened level of destructive impact per strike, forcing the Israeli Ministry of Defence to confront agonizing decisions regarding the prioritisation of civilian centres over vital military installations. The rapid decline in Arrow 3 interceptor stock exacerbates this problem, limiting the state’s ability to defend itself.
Simultaneously, the United States navigates a precarious strategic landscape, having expended a substantial portion of its global THAAD and SM-3 missile inventories within the West Asian theatre. This logistical challenge significantly affects Washington’s ability to sustain a believable deterrent against potential adversaries in the Indo-Pacific.
If Iranian continuous airstrikes target the Haifa refinery, it could irreparably destroy its crucial infrastructure, causing definite fuel scarcities in Israel and higher energy prices across the region. With Hezbollah’s active involvement in the conflict and the impending threat of the Strait of Hormuz closing, the conflict poses a systemic risk to the entire world economy.
Iran’s ongoing attacks on significant transport hubs in Dubai and Doha underscore the Gulf countries’ persistent challenge in guaranteeing security and supporting their economies. The Iranian leadership’s strategy of attrition, aimed at depleting Western resources, has created a scenario where Washington and Tel Aviv’s inability to neutralise launch sites through airpower alone signifies an increasing need for wider military involvement.
Indicators to Monitor
- Changes in the volume of Hezbollah rocket fire into northern Israel.
- Increasing use of Iranian hypersonic missiles to target regional infrastructure.
- Frequency of US cargo flights delivering missile interceptors to regional airbases.
- Operational status of Iranian underground missile cities following US and Israeli airstrikes.
- Trends in global oil prices following reports of refinery damage in Haifa or Ashdod.
- US troops movement in the Middle East and preparations for an operation on-the-ground.
Outlook
The conflict is moving toward a war of industrial production. Iran will likely increase its reliance on cluster munitions to capitalise on radar vulnerabilities.
An insufficient supply of interceptor munitions may leave Israel without the ability to protect its citizens and infrastructure, causing local disappointment and anger towards Netanyahu’s government.
This scenario would require an enlargement of ground operations to neutralise extant Iranian launch facilities and ensure the security of global energy resources.
