Tensions between Israel and Iran-backed Iraqi militias have escalated amid the broader 2026 Iran conflict, with militias conducting drone and missile attacks on Israeli targets and Israel conducting prior airstrikes on militia sites inside Iraq. Recent statements from Israeli military spokespersons indicate close monitoring of threats from Iraq and a readiness to act as necessary, while militia leaders have signaled expectations of strikes on faction headquarters. These dynamics coincide with the U.S. troop withdrawal deadline of September 30 and Baghdad’s related push to disarm pro-Iran groups, creating pressure points that traders weigh when assessing the probability of qualifying Israeli air or missile strikes by the market’s resolution date.