Reuters World News - Iran conflict widens as midterms approach

Episode Date: March 2, 2026

The Iran conflict widens as Israel strikes Lebanon following attacks by Hezbollah, and the risk of a regional war with Iranian proxies ramps up. U.S. officials are skeptical of the likelihood of regime change in Tehran. Only one in four Americans support U.S. strikes on Iran, signalling possible trouble for the Republicans ahead of the November midterms. Plus, a safe Republican Senate seat in Texas suddenly looks fragile as primary season kicks off.   Listen to the Morning Bid podcast ⁠⁠here⁠⁠. Sign up for the Reuters Econ World newsletter ⁠⁠here⁠⁠. Listen to the Reuters Econ World podcast ⁠⁠here⁠⁠. Visit the Thomson Reuters Privacy Statement for information on our privacy and data protection practices. You may also visit megaphone.fm/adchoices to opt out of targeted advertising. Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, I'm Kim Vannell in Wanganui, New Zealand. It's Monday, March 2nd. Today, Israel hits Lebanon as the Iran conflict widens, risking a wider war between the US and its allies and Iran's proxies. Polling shows just one in four Americans support US attacks on Iran, and midterm season kicks off with the Texas primary ellipis test for both parties. This is Reuters World News, bringing you everything you need to know from the front lines in 10 minutes, seven days a week. But first, some breaking news. For more, here's my colleague Kamau Krimmins. Thanks, Kim. Three US jet fighters were mistakenly shot down by Kuwaiti air defences. That's according to the US military. In a post on X, US Central Command said the three F-15s were hit in an apparent friendly fire incident.

The six crew safely ejected. Now back to Kim. Scenes of devastation are unfolding across the Middle East. Part of a residential area in the Israeli city of Tel Aviv turned to rubble. In Dubai, a missile sparks a massive fire at the crucial Jebel Ali port. A U.S.-run naval base in Bahrain is set on fire. An oil tanker is attacked off the coast of Oman. And in Tehran's Engelab Square, thousands of people gather, wailing women beat their chests.

As supporters of the country's supreme leader mourn his death. In the days since Israel and the US began their assault on Tehran, the scale of the conflict has widened. both from Iran's continued retaliatory attacks and with Israel now expanding its gaze to Lebanon. More than a dozen explosions rocking the capital, Beirut, forcing residents to flee. Israel says it's targeting the Iranian-backed armed group Hezbollah, which earlier launched missiles against Israel

and retaliation for the killing of Iran's Ayatollah Ali-Kamini. A fragile peace between Israel and Lebanon, long-time enemies, is now in tatters. U.S. President Donald Trump, meanwhile, is signaling that U.S. and Israeli strikes on Iran could last weeks. Combat operations continue at this time in full force, and they will continue until all of our objectives are achieved. He says almost 50 Iranian leaders have been killed and that the U.S. has started sinking Iran. Navy, destroying Iranian warships and, quote, going after the rest.

The U.S. also announced its first casualties of the campaign. Three service personnel killed on a base in Kuwait, according to officials. Trump says there will likely be more U.S. casualties. But we'll do everything possible where that won't be the case. But America will avenge their deaths and deliver the most punishing blow to the terrorists who have waged war against basically civilization. In Tehran, a new leadership council has temporarily assumed the duties of the supreme leader. But Ayatollah Ali Khamenei's death still leaves the Islamic Republic in its most perilous crisis

since the 1979 revolution. Trump is hoping that will result in regime change that is more friendly to the U.S. and Israel's interests. Several officials and analysts, however, think that looks unlikely, at least in the immediate term. The regime, they say, was meant to outlast one man. Foreign policy editor Don Durfey has the latest on where that leaves America in terms of next steps. So on Sunday, Iran announced that they were setting up a new leadership council in the wake of the killing of Hamani. It's led by President Masu Peseshkin. and Trump has said that he wants to have talks with this leadership council.

It's not clear whether those are going to be successful or not. Iran is not Venezuela. In Venezuela, you still had a fairly large group of relatively apolitical government workers, you know, who are in theory willing to work with the United States. In Iran, you've had a clerical regime, which exercised really tight control over all aspects of the government. And you also have the powerful revolutionary guards who are in. deeply embedded in Iranian society. And, you know, just not clear that even if this leadership counsel were to make some sort of agreement with Trump that the rest of the government would follow,

although you never know. There might be some sort of compromises that they might make that would be acceptable to the U.S. That could mean a drawn-out war with a role of Iran's proxy fighters could be critical. Well, Trump has said that the fighting could go on for another four weeks. unclear if it would really last that long, but Israel and the United States have signaled that there's a lot of targets that they still want to hit. Today, they were focusing on sinking the Iranian Navy. And for Iran, you know, they used a number of their ballistic missiles and retaliatory attacks over the last couple of days, but they are believed to still have many missiles in reserve. We don't know yet how many of those that the U.S. might have destroyed.

But for sure, they're holding some missiles and reserves so that they continue to retaliate. And beyond military retaliation, you know, one of the worries with Iran is what they would call asymmetric retaliation, which could come in the form of terrorist attacks by Iran or by its proxies. Those could happen soon. They could happen over months, over years. You just don't know. So they have various ways of fighting back. Markets are opening as news of the weekend reverberates.

So to unpack what is happening on markets, I'm joined by Mike Dolan from our sister podcast MorningBid. Hey, Mike. Hi, Kim. Good morning. Good morning. So how are markets reacting? They are, as you might expect, crude oil prices are sharply higher.

But interestingly, given the extent of the weekend's events and how broadly spread they are across the Middle East, they're not as up as high as many people had feared. As it stands, we're about 6% higher for US crude, above $80 a barrel. But even at the weekend, as it unfolded, people were already coming out with these $100 barrel oil forecasts, which were still well shy of. Now, it's clearly a fluid situation.

Everything is unfolding by the minute. but as it stands, the oil price reaction is sharp, but not worst-case scenario. Any other likely flow-on effects, given how inflationary oil prices traditionally are? Well, look, all the financial markets will react to this. This is a very significant event, and you're getting what they call the markets risk off. That means that the more risky assets are being sold off. So equities are falling. We're seeing a bid for gold.

we're seeing a confusing picture for bonds. So US Treasury bonds, which normally riff off the interest rate outlook, they're getting a safety bid. They're considered a safety asset, and that's offset by the rising oil price implication for inflation, which, of course, is very politically sensitive for President Trump in this election year. Thanks so much for that, Mike. Don't forget you can listen to morning bid seven days a week,

wherever you get your podcasts. Speaking of it being an election year, the deaths of US service members could pose a major political risk for Trump ahead of the November midterms. Only one in four Americans approve of the US strikes on Iran, according to new Reuters Ipsos polling.

The poll shows voters are worried about American casualties, with many Republicans saying their support would drop if US troops are harmed. The strike on Iran is opening up a rare fault line inside the MAGA movement. National Affairs reporter Tim Reid says even some of the president's most influential supporters are warning the attack could backfire. It's still early days, but this attack on Iran has led to some of his most vocal supporters on the right within the MAGA movement, influences and outspoken supporters

to come out to say that they did not vote for a foreign movement. war. And they state the central argument that attacking Iran does nothing to help the cost of living here back in America and the rate of inflation. Midterm season, by the way, kicks off tomorrow with the first primaries in Arkansas, North Carolina, and Texas. According to our correspondent, Joseph Axe, it's the Senate race in Texas that's getting the most attention. So on the Republican side, he got the incumbent, John Cornyn, who's been in the Senate for a long time, And his main challenger is the Attorney General, Ken Paxton, who is a real Maga warrior in a way that Cornyn isn't. On the Democratic side, you've also got a really interesting race between James Talarico.

He's a state lawmaker who has gotten a lot of attention for reaching out to conservatives across the aisle. And his opponent is Jasmine Crockett. She's a member of the U.S. House of Representatives. and she's gotten a lot of national attention herself for these kind of viral confrontations with members of the Trump administration. So for Republicans, they're going to be looking to see do their voters want, you know,

someone in kind of the mold of Trump, right, a true MAGA believer. And then on the Democratic side, you know, the same kind of idea, right? They want someone who's going to try to make a bit more of an appeal to moderate voters, independent voters, dissatisfied Trump voters.

For more on what's happening in the Middle East and the global repercussions, check out Reuters.com or the Reuters app. Don't forget to follow us on your favorite podcast player. If you're listening on a smart speaker, just ask for the latest news from Reuters seven days a week. We'll be back tomorrow with our daily headline show.