Iran's military actions against Kurdish opposition groups in Iraq's Kurdistan Region, including over 1,000 strikes since February 2026, have shaped trader views on escalation risks, alongside roughly 600 Iran-backed militia attacks on U.S. facilities inside Iraq. Recent border closures by Baghdad at crossings like Al-Sheeb in Maysan province reflect security concerns over smuggling and militia movements, prompting Iranian criticism and local protests. On October 31, Iranian state media excluded Iraq from a published list of potential retaliation targets if the U.S. or Israel launches further strikes on Tehran, signaling a diplomatic effort to limit direct confrontation while Supreme Leader directives emphasize readiness. Iraqi Prime Minister Ali al-Zaidi's push for militia disarmament by June 2027 and neutrality pledges add uncertainty, as any renewed regional strikes could alter dynamics before year-end deadlines.