The US-Israel military campaign against Iran has intensified, complicating Iraq’s diplomatic position as it navigates between its critical relationships with both the United States and Iran. Iraqi Prime Minister Ali al-Zaidi’s recent meetings in Washington spotlight the delicate balance Iraq must maintain amidst escalating tensions. The conflict has seen increased military activity, including US airstrikes on Iran-backed militias in Iraq, which adds pressure on Iraq to reconsider its ties with Iran while trying to foster a strategic economic partnership with the US.
In prediction markets, the likelihood of a US-Iran deal in 2026 appears diminished. The intensified conflict suggests challenges for diplomatic progress, affecting markets related to Iran’s reconstruction funding and uranium enrichment agreements. Odds for these outcomes have seen a decline, reflecting market participants’ interpretation of the heightened hostilities as unfavorable for a potential deal.
The geopolitical developments are also influencing markets on a possible Israel-Iran permanent peace deal by the end of July 2026. The current probability remains extremely low, indicating skepticism among market participants regarding the feasibility of a resolution in the immediate future.
