Iran threatens US with retaliation after new sanctions

Iran has issued a warning of potential retaliation against the United States following the announcement of new sanctions by Washington. The sanctions, which aim to increase economic pressure on Iran by targeting its oil and financial sectors, have escalated tensions between the two nations. This development is part of the ongoing conflict between the US and Iran, with both sides engaged in a complex confrontation involving diplomatic, military, and economic dimensions. The markets are responding to these tensions, suggesting a decreased likelihood of a US-Iran deal that includes reconstruction funding for Iran in 2026. Key Takeaways Market pricing suggests a decline in the probability of a US-Iran deal in 2026, consistent with the heightened tensions from Iran’s retaliation threats. The current probability of Iran reconstruction funding being included in a US-Iran deal has dropped to 13.5% from 24% a week ago, reflecting market sentiment. Iran’s threats are seen as a significant obstacle to diplomatic negotiations, with potential implications for future US-Iran relations and market expectations. What to Watch Observers should monitor any further escalations or diplomatic engagement...