As protesters fill the streets of Iran night after night, leaders in the region and around the world are grappling with the possibility that the Islamic Republic could be overthrown — a major event that would transform global geopolitics and energy markets.
Supreme Leader Ayatollah Ali Khamenei’s regime has weathered repeated protests, but the demonstrations that began two weeks ago are spreading – with hundreds of thousands taking to the streets, according to some reports, despite threats and brutal crackdowns from the authorities weekendfrom the capital Tehran to dozens of other cities across the country, with a population of 90 million. They were cheered by President Donald Trump, who had just captured Venezuelan President Nicolás Maduro, and the U.S. leader had repeatedly threatened to attack Iran in recent days, signaling that the United States was back in the business of regime change.
World leaders and investors are watching closely. U.S. commanders have briefed Trump on options for a military strike, according to White House officials. Brent crude oil Increased by more than 5% Oil prices topped $63 a barrel on Thursday and Friday as investors priced in the possibility of supply disruptions from OPEC’s fourth-largest producer.
“This is Iran’s most important moment since 1979,” said William Usher, a former senior CIA analyst on the Middle East, referring to the revolution that gave birth to the Islamic Republic, upended the balance of power in the region and led to decades of rancor between Tehran and the United States and its allies. “The regime is in a very difficult situation right now and the main driver is the economy. I think their window to re-impose control is shrinking and the tools to do that have been reduced.”
More than 500 protesters have been killed in the past two weeks and more than 10,000 people have been arrested in demonstrations triggered by the protests, the Associated Press reported, citing the American Human Rights Activists News Agency. Currency crisis and economic collapsebut now also focusing on the regime.
Authorities have been trying to block the internet and phone networks since Thursday to quell growing anger among Iranians over government corruption, economic mismanagement and repression. Foreign airlines have canceled flights to the country.
Trump has repeatedly warned Iran that the United States will strike if Iran kills peaceful protesters. Meanwhile, Trump has stepped up his attacks on the post-World War II global order with stunning assertions of U.S. power, including demanding Venezuela’s oil resources after capturing Maduro and threatening to take over Greenland from NATO ally Denmark.
A senior European official who spoke on condition of anonymity said that in June this year, Israel launched a 12-day air war with the assistance of the United States and launched a fierce attack on Iran. Israel is in close contact with European governments regarding the situation on the ground.
If the regime does fall, it would be a blow to Russian President Vladimir Putin, who would lose another foreign ally following the overthrow of Maduro this month and Bashar al-Assad in Syria more than a year ago, the official added.
For oil traders, the risks are huge. But it is unclear whether unrest has broken out in the main oil-producing province of Khuzestan, and so far there are no signs of a reduction in crude exports. On Saturday, Reza Pahlavi, the former king’s son who lives in exile in the United States, urged oil workers: strike. The 1978 oil strike was one of the death knells for his father’s monarchy, as it dealt an immediate blow to the economy.
The market’s “focus has now turned to Iran,” said Arne Lohmann Rasmussen, principal analyst at A/S Global Risk Management, which helps clients manage energy market volatility. “Markets are also increasingly concerned that a Trump-led United States may exploit chaos to try to overthrow regimes, as we have seen in Venezuela.”
Emotions are running high in the White House following the tactical success of the campaign against Maduro and Trump’s decision to bomb Iran’s nuclear facilities at the end of a 12-day war. U.S. officials have also stepped up pressure on Denmark to relinquish control of Greenland, a sign of the government’s interest in doing more overseas.
Read more: Trump’s expulsion of Maduro shows his new world order has arrived
Despite the risks, Trump is likely to try to overthrow a government that has been an enemy of the United States and Israel for 45 years.
“The balance of power is going to change dramatically,” veteran emerging markets investor Mark Mobius said of the Islamic Republic’s collapse. “The best outcome would be a complete change of government. The worst outcome would be continued internal conflict and continued rule by the current regime.”
Trump has at times railed against U.S. adventurism in the region, where the ouster of U.S. nemesis Saddam Hussein in Iraq sparked a generation of chaos and terrorism that cost hundreds of thousands of lives and trillions of dollars in damage.
It’s this potential power vacuum that worries Arab leaders in the Gulf Cooperation Council, regional officials say. While the group, which includes Saudi Arabia, the United Arab Emirates and Qatar, often views Iran as an adversary, its members have sought to improve relations in recent years to ensure Tehran does not lash out at Israel or any U.S. military operations by attacking them. The specter of the Arab Spring looms larger, with dictators toppling across the region, but with chaos in their wake.
Iran has warned that U.S. assets in the region, where it has deep commercial ties and has tens of thousands of troops stationed, and Israel would become “our legitimate targets” if attacked.
Read more: How Sanctions and Currency Collapse Are Adding to Unrest in Iran
The Islamic Republic has been severely weakened over the past two years by a stagnant economy, rampant inflation and Israeli attacks on it and its proxies. But it retains a vast and advanced arsenal of ballistic missiles capable of striking targets across the Middle East, from military bases to oil facilities, and the regime remains backed by the country’s myriad security forces, including the crucial Islamic Revolutionary Guard Corps.
Ellie Grandmaye, deputy director of the Middle East and North Africa program at the European Council on Foreign Relations, said the worst outcome for the Gulf Cooperation Council and countries like Turkey and Pakistan would be chaos in Iran. This possibility is made more likely by the diversity of Iran’s protesters, which include everyone from urban and secular elites to religious conservatives, and the lack of a unifying leader.
“With the rapprochement between the GCC and Tehran over the past few years, people have a better sense of the devil as you know it, as opposed to complete chaos or unknown power structures that are foreign to them,” Celanmaye said.
U.S. and Israeli attacks could even strengthen governments and reduce the appeal of protest movements. In June, nationalism surged as the Jewish state and Washington continued to drop bombs.
Dina Esfandiary, Middle East analyst at Bloomberg Economics, said the Islamic Republic may not survive in its current form by the end of 2026. The most likely scenario, she said, is a leadership shake-up that largely preserves the system, or a coup by the Islamic Revolutionary Guard Corps, which could mean greater social freedoms — the group is run by generals rather than clerics — but less political freedom and a more militaristic foreign policy.
The chances of a revolution remain fairly low, she said.
“A collapse seems unlikely at this time,” she said. “Iranians fear chaos because they see it wreaking havoc in neighboring Iraq and Syria. What’s more, the government is cracking down hard.”
On Sunday, Iranian President Masoud Pezeshkian issued a conciliatory statement expressing his condolences to the families affected by the “tragic consequences.” Masoud Pezeshkian is a former heart surgeon and moderate relative of high-level Iranian government officials.
“Let’s sit down, hold hands and work things out,” he said on national television.
Many protesters are unlikely to believe him. The more powerful top leaders, as well as members of the security forces, have become increasingly bellicose, floating death sentences and making clear they are prepared to respond with brutal force as usual.
“I don’t think the collapse of the regime would be a good thing,” said Arthur, a former CIA analyst. “In the short term, I can imagine there will be some fragmentation in the country as ethnic minority groups and some provinces seek autonomy from Tehran. The Islamic Revolutionary Guard Corps will fight aggressively to save the regime, so I think the potential for mass violence is high.”