Below is a regularly paid article from Prophet, made available to readers of adj.news

Each time a major event starts, seemingly everyone is an expert on it. This week was full of geopolitics experts, each with their own opinion on the Iran-Israel war. Depending on who’s your pundit of choice you could hear anything, from Israel totally obliterating Iran to Iran having full air superiority over Israel (sic!).

Some of them are obviously more right than others. But the truth is that no one on social media has the full picture. Sure, you have a few missiles videos circulating, but other than that what you see is war propaganda.

Call it as you like, the “fog of war” makes us unable to clearly see and assess the developments on the ground. We can have our suspicions, we can trust one war propaganda more than the other based on what we know about each country and their military.

But in the end, does it really matter? Well, unless you are in the Middle East, the operational details on the ground have no significance. What does matter though is what will happen.

The main question that everyone wants to ask is not how many missiles did Iran fire. It’s not even “who will win?”. It’s rather “what does victory mean?” and “what are the global consequences of possible developments?”.

And these are the things we can forecast. Whether you are a doomer (why though, please enjoy life), an Israel supporter or a pacifist, you simply want to know what will happen.

Intro

I need to be comprehensive here. So I will do it the proper way:

1. Context - why are we here?
2. Current situation - where are we now?
3. Scenarios - what’s next?
4. Prediction markets - how you can profit from all of this.

Context

To not make it a book, I should start at Iran-US nuclear deal negotiations. Started on the 12th of April, the aim of Trump administration was to prevent Iran from having nukes in a diplomatic way. However, Trump was looking for a long term solution. This means that contrary to previous nuclear deal, the main point of the negotiations was to prevent Iran from having uranium enrichment capabilities.

At the same time, Iran engaged in the talks to get concessions around sanctions as well as security guarantees. The main reasons they even pursue a capability to create nukes is to deter Israeli threat and to have increased ability of projecting power in the region.

However, they got badly hurt by the sanctions. Combining this with the recent blow to their proxies, a deal that would result in safety + potential economic prosperity was surely tempting.

This One Clause

As usual though, there was this one issue that both sides knew would be difficult to reconcile. US needed to make sure that Iran won’t be able to resume uranium enrichment in case things go south. Iran needed to make sure they can resume enrichment in case eg. US security guarantees wouldn’t work.

Trump did his classic and put time pressure on Iran - in the official letter commencing the negotiations, he put out a 60-day deadline to reach a deal or war will break out. This small detail is important for later.

And so the negotiations went on. They had 5 rounds of talks and as expected, the enrichment was the main point of contestation. However, both sides indicated that they were cautiously optimistic about the progress. At one point Trump even said that the deal was close, but Iran denied the claims.

At the same time, media reported on the apparent rift between Trump and Netanyahu. The culmination point was Trump’s visit to the Middle East, when he didn’t even visit Israel and was pressuring them to a Gaza ceasefire. We are now moving closer to the strike.

Days Before

In the days before the strike, there were two factors, that led many to believe that there are slim chances of one happening:

1. There was a sixth round of Iran-US talks scheduled for Sunday.
2. Netanyahu’s son was supposed to have a wedding on Monday.

Yet, in an apparent defiance of the above, the IDF did strike Iran on early Friday.

12 Day War

And so the Operation Rising Lion began. Israel really outdid itself in the first days, killing a lot of high ranking members of IRGC as well as vast majority of nuclear scientists working on the program. And these were high precision strikes:

Additionally they struck supposedly majority of ballistic missile launchers, military facilities and some oil fields. And the culmination of their strikes were the nuclear facilities.

Because Israel had two main goals of this operation:

• get rid of Iran’s nuclear program and
• change the regime to a more favorable one and leave nuclear facilities under western supervision.

The first one is pretty obvious as it was repeatedly stated and it was also the aim of failed Trump deal. The other one is a bit more complex, but I will be back to analyzing Israel’s goals and next steps soon.

After the initial shock and disarray in the Iranian ranks, the response began. Despite severe blow to the leadership, you need to remember that Iran has a deep bench - in a country with 90 million population and highly developed police state there are plenty of people ready to take over the reigns.

We saw pretty big strikes on Tel Aviv and Haifa although nothing of significance was actually destroyed. But at this point the war hit a bit of a stalemate.

Fordow And Other Underground Facilities

The thing is that Israel has no means to actually destroy the Iranian nuclear program. The main facility - Fordow - is located over 90 meters deep. Same can be said about Natanz that is located somewhere 40-50 meters underground and shielded by a concrete shield of 7.6 meters.

Only US MOPs had a chance to breach such barrier. And they tried. On Sunday morning European time, the B2s along with an escort as well as supportive fire from US submarines, bombed 3 Iranian nuclear facilities - overall 14 MOPs struck Fordow and Natanz and additionally several Tomahawks hit Isfahan. I hope you tailed me on that ;).

Trump announced massive success, a total obliteration of the facilities and proceeded to negotiate a ceasefire, which eventually happened after a few issues with subsequent strikes.

But can we say it’s over?

It Ain’t Over Till It’s Over

Truth be told, none of Israel’s goals have been achieved. Because Fordow was long empty before the strikes and enriched uranium is still somewhere in Iran.

The regime is still standing strong and there are no signs of it coming down. But we have a ceasefire, right?

Well, only as long as Iran doesn’t “pursue a nuclear weapon” which basically mean further enrich uranium. A few weeks from now we will learn that that is not the case. Iran has already voted to bar IAEA from visiting the sites. And it still has somewhere around 400 kg of 60% enriched uranium.

In the last few days I’ve read enough about uranium to understand that the most difficult part in enrichment is the initial phase. Having a stock of 60% enriched uranium essentially means that you can have a weapon’s grade uranium within a few weeks and a crude nuclear weapon within a few months.

The key part here are centrifuges that enrich the uranium, that were most probably badly damaged as they are a very delicate equipment. But since Iran has the knowledge base, it won’t be difficult to restart the process. The reality is that the nuclear program was not destroyed, or even delayed, at all!

And I didn’t even move to the regime change part. Israel did a couple of things to show us that it is somewhat serious about it. First is the name of the operation - Rising Lion. See any similarities:

Israel is known for symbolic operations’ names and this one is no different. Same story is with its Gaza operation named Gideon’s Chariot. Gideon was leading Israelis in a quest to annihilate their enemies. Yet another reason to fade any ceasefire rumors.

But back to the topic. Besides the name, Israel also started to use Reza Pahlavi as a propaganda piece. I’m not exactly sure that this is a wise strategy as the 1979 revolution happened for a reason (hint: the Pahlavi regime was highly unpopular). However, it signals intention.

What’s Next?

Considered that none of Israel’s objectives were fulfilled, I’m of the opinion that the restart of the war is extremely likely. The caveat here is that for both of this goals, US support is needed.

The other issue is attack point. At this moment I believe that there are two options (yes, both include breaking the ceasefire by Israel):

1. Strike on enriched uranium shipment.
2. Strike on Ayatollah Khamenei.

Second option would require substantial US buy-in (most probably a prolonged military presence in the region) so I doubt it will happen. But I do think a ceasefire violation is in play before end of August by a strike on enriched uranium shipment. It’s simply unwise to let all the damage done to waste and let Iran rebuild capabilities. Substantial work was done and if Israel simply waits, Iran will rebuild the capabilities with lessons of the 12 day war in mind.

My odds of restarting the conflict by end of August are 80/20. I won’t even cite baseline here as Israel has a long standing history of violating ceasefires and now it also has all the incentives it needs. It just needs to figure out how to get the US buy-in.

Coming to markets I don’t really like this market as I would prefer a longer timeline, but I put up some orders for a Yes position (I mean the other market on July 11th, but the embedding is broken):

I also put up orders for an Israel position here:

Be careful here, the market will resolve 50/50 in case there is no ceasefire violation.

Also as a bonus, I’m currently takin a No position on a Gaza ceasefire till the end of July. Rationale the same as before:

Annihilation is annihilation after all ;).

Wrap up

And that’s all for today! It’s been long time coming, but I hope you’ve been reading my tweets to accommodate for the short-term developments. The key thing is that it is far from over and we’ll see new action soon. Even Trump agrees it’s likely.