U.S. Secretary of War Pete Hegseth said in a speech marking the 25th anniversary of the 9/11 attacks that the United States had killed Iran’s leadership and destroyed the country’s air force and navy.

The remarks point to a major escalation in the ongoing conflict between the United States and Iran, which began with U.S.-Israeli attacks on Iran earlier this year. They came amid a fragile ceasefire and followed recent U.S. strikes against Iranian targets, underscoring the volatility of the conflict.

Hegseth’s statement may indicate that the U.S. is seeking to prevent Iran from obtaining nuclear capabilities, adding to geopolitical tensions in the region. The reported destruction of Iran’s air force and navy could also signal increased instability within the country’s military and leadership structures.

Market developments cited in the source suggest that traders are assessing the possibility of increased U.S. military intervention in Iran. The source also said markets were pricing the possibility of a change in Iran’s leadership by the end of 2026, a scenario it described as consistent with recent developments.

Observers will be watching for further U.S. military actions that could indicate preparations for a broader campaign. Iran’s internal political dynamics may also affect the status of its leadership by the end of the year. Diplomatic efforts and regional alliances are expected to remain important factors in the conflict’s future course and could influence market perceptions.