Ongoing hostilities between Israel and Iran, including the U.S.-backed military campaign that began with nearly 900 strikes on February 28, 2026, have reinforced decades of severed diplomatic ties dating to the 1979 revolution. Fragile ceasefires since early April remain strained by continued Israeli operations in Lebanon and Iranian restrictions in the Strait of Hormuz, with no public signals from either side indicating interest in embassy reopening or normalization. Traders price the 90% "No" outcome on the absence of any credible path to restored relations by year-end, absent an unexpected regime shift or major breakthrough in stalled talks. Structural barriers such as Iran's nuclear posture and mutual security concerns continue to dominate assessments of near-term diplomatic progress.