Israel, Iran trade strikes as air war escalates with no end in sight
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Israel bombed nuclear targets in Iran on Thursday and Iran fired missiles and drones at Israel after hitting an Israeli hospital overnight, as a week-old air war escalated with no sign yet of an exit strategy from either side.
Following the strike that damaged the Soroka medical centre in Israel's southern city of Beersheba, Prime Minister Benjamin Netanyahu said Tehran's "tyrants" would pay the "full price".
"Are we targeting the downfall of the regime? That may be a result, but it's up to the Iranian people to rise for their freedom," Netanyahu said. "Freedom requires these subjugated people to rise up, and it's up to them, but we may create conditions that will help them do it."
Defence Minister Israel Katz said the military had been instructed to intensify strikes on strategic-related targets in Tehran in order to eliminate the threat to Israel and destabilise the "Ayatollah regime".
Israel's sweeping campaign of airstrikes aims to do more than destroy Iran's nuclear centrifuges and missile capabilities. It seeks to shatter the foundations of Supreme Leader Ali Khamenei's government and leave it near collapse, Israeli, Western and regional officials said.
Netanyahu wants Iran weakened enough to be forced into fundamental concessions on permanently abandoning its nuclear enrichment, its ballistic missile programme and its support for militant groups across the region, the sources said.
US President Donald Trump, meanwhile, has kept the world guessing, veering from proposing a swift diplomatic end to the war to suggesting the United States might join it. On Wednesday, he said nobody knew what he would do.
A day earlier he mused on social media about killing Khamenei, then demanded Iran's unconditional surrender. Three diplomats told Reuters that Trump's special envoy Steve Witkoff and Iranian Foreign Minister Abbas Araqchi have spoken by phone several times since Israel began its strikes last week.
In an apparent reference to the US, Iran's Supreme National Security Council said on Thursday it would use a different strategy if a "third party" joined Israel in the war.
STRAIT OF HORMUZ THREAT
In the latest wave of attacks, Israel said it had struck Iran's Natanz and Isfahan nuclear sites. It initially said it had also hit Bushehr, site of Iran's only functioning nuclear power plant, but a spokesperson later said it was a mistake to have said this.
An Iranian diplomat told Reuters Bushehr was not hit and Israel was engaged in "psychological warfare" by discussing it. Any attack on the plant, near Arab neighbours and housing Russian technicians, is viewed as risking nuclear disaster.
A week of Israeli air and missile strikes has wiped out the top echelon of Iran's military command, damaged its nuclear capabilities and killed hundreds of people. Iranian retaliatory strikes have killed at least two dozen civilians in Israel.
On Thursday, Iran's Revolutionary Guards said in a statement it had launched combined missile and drone attacks at military and industrial sites linked to Israel's defence industry in Haifa and Tel Aviv. Israel reported missiles launched from Iran towards its territory.
Iran has been weighing its wider options in responding to the biggest security challenge since its 1979 revolution.
A member of the Iranian Parliament's National Security Committee Presidium, Behnam Saeedi, told the semi-official Mehr news agency Iran could consider closing the Strait of Hormuz, through which 20% of daily global oil consumption passes.
Oil prices jumped on Thursday. Iran was maintaining crude oil supply by loading tankers one at a time and moving floating oil storage much closer to China, two vessel tracking firms told Reuters, as the country seeks to keep a key source of revenue while under attack.
Earlier, the Israeli military said it targeted the Khondab nuclear site near Iran's central city Arak overnight, including a partially-built heavy-water research reactor. Heavy-water reactors produce plutonium, which, like enriched uranium, can be used to make the core of an atom bomb.
Iranian TV showed footage of smoke billowing from the direction of Arak, but Iran's atomic energy agency said the attack caused no casualties. The Israeli military also said it attacked launch sites in western Iran after attempts to restore them were detected.
It has severely weakened Iran's regional allies, Hamas in Gaza and Lebanon's Hezbollah, and has bombed Yemen's Houthis.
The extent of the damage inside Iran has become more difficult to assess in recent days, with the authorities apparently seeking to prevent panic by limiting information.
Iran has stopped giving updates on the death toll, and state media have ceased showing widespread images of destruction. The internet has been almost completely shut down, and the public has been banned from filming.
Thousands of residents have fled Tehran, a city of 10 million, jamming the highways out.
Inside Israel, the missile strikes over the past week are the first time a significant number of projectiles from Iran have pierced defences and killed Israelis in their homes.
The director general of the Israeli hospital that was damaged in Beersheba, Shlomi Kodesh, told reporters at the site that a missile strike had destroyed several wards and wounded 40 people, mostly staff and patients.
Iran's Revolutionary Guards said they had targeted Israeli military and intelligence headquarters near the hospital. An Israeli military official denied there were military targets nearby. Missiles also hit a residential building in Ramat Gan, east of Tel Aviv.
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Energy markets would convulse, and strategic reserves would be tapped globally. For Pakistan, where nearly 30% of the import bill is fuel, this would mean an instant blowout of the current account deficit, a weakening rupee, and imported inflation feeding into everything from electricity tariffs to grocery prices. A rise in oil would also raise transport costs and production expenses for exporters – particularly in textiles and manufacturing – shrinking competitiveness just when the country is trying to climb out of economic stagnation. Iran says no nuclear talks under Israeli fire, Trump considers options US Involvement: The risk of a regional war Should Israel launch a significant military operation against Iran's nuclear infrastructure, U.S. involvement is almost guaranteed – if not militarily, then through security and diplomatic cover. Iran could retaliate through its extensive network of regional allies: Hezbollah in Lebanon, armed groups in Syria and Iraq, and the Houthis in Yemen. In response, Israel may strike across multiple fronts. The Gulf, already skittish, could be drawn into this widening circle of conflict. This would be a pan-regional war, not a bilateral spat – and global markets would respond accordingly. For Pakistani businesses and policymakers, this isn't just an oil story – it's about the collapse of confidence. Equity markets across the region would take a hit, FDI flows into emerging economies would pause, and the risk premium for countries like Pakistan – already contending with political instability and IMF obligations – would rise further. That means higher borrowing costs, capital flight, and declining investor appetite for anything deemed 'exposed to the region.' Trade corridors under threat Even beyond the Strait, Iran serves as a critical trade conduit to Central Asia and Turkey. With road and rail links passing through its territory, Pakistan has in recent years viewed Iran as a potential bridge to diversify trade routes. If Iran becomes a war zone or faces renewed and expanded US sanctions, these overland corridors could shut down indefinitely. The Pakistan-Iran-Turkey freight corridor, a pillar of Pakistan's regional trade ambitions, would collapse. And as regional tensions rise, other initiatives – such as Iran's role in China's Belt and Road – could also stall, indirectly affecting Pakistan's own CPEC trajectory. The perils of regime change Some voices in Western capitals quietly suggest that an Iran–Israel war could trigger regime change in Tehran. But regime change rarely brings instant democracy or economic liberalism. More often, it brings chaos, uncertainty, and power vacuums. In Iran's case, a collapsed regime could unleash internal civil strife, embolden separatist movements, and leave critical oil and gas infrastructure vulnerable. 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