Ongoing armed conflict between Israel and Iran, including U.S.-backed strikes launched in February 2026 that killed Supreme Leader Ali Khamenei and targeted nuclear and military sites, followed by repeated missile exchanges, ceasefires, and renewed escalations over the Strait of Hormuz into August, has eliminated any near-term path to diplomatic normalization. Iran and Israel have maintained no formal relations or embassies since 1979, and the active state of hostilities—with ongoing strikes, territorial disputes in Lebanon and elsewhere, and threats against energy infrastructure—keeps any embassy reopening in Tehran off the table for the remainder of 2026. Trader consensus at 96.7% reflects this structural barrier, though a sudden comprehensive peace agreement or regime-level shift in Tehran could theoretically alter timelines before year-end.