Iran Update – December 18, 2025: Strategic Assessment from the Institute for the Study of War
The Institute for the Study of War released its latest briefing on Iran on December 18, 2025, outlining recent developments in the country's military posture, diplomatic engagements, and domestic economic conditions. The report notes a modest increase in the production of unmanned aerial systems and a continuation of missile test activities that have drawn attention from regional observers.
According to the institute, Iran has conducted three short‑range missile launches over the past month, all of which adhered to previously declared testing schedules. While the tests did not introduce new missile types, they demonstrated incremental improvements in guidance accuracy. Simultaneously, Tehran announced the deployment of additional air‑defense batteries along its western border, a move analysts interpret as a precautionary response to heightened tensions with neighboring Iraq and Syria.
On the diplomatic front, Iran's foreign ministry reported progress in indirect talks with European counterparts regarding the 2023 nuclear agreement framework. Officials emphasized that any potential reinstatement of the Joint Comprehensive Plan of Action would require verification mechanisms acceptable to both parties. However, the institute cautions that sanctions relief remains contingent on demonstrable compliance, and that the United States has signaled a willingness to maintain pressure until a verifiable limits‑setting arrangement is reached.
Economically, the briefing highlights that Iran continues to grapple with inflationary pressures exacerbated by lingering sanctions on its oil exports. While domestic production of certain commodities has risen, the overall fiscal outlook remains constrained. Regional experts suggest that the government may seek to diversify revenue streams by expanding its petrochemical sector and pursuing greater trade ties with non‑Western partners.
Looking ahead, the Institute for the Study of War projects that Iran will likely maintain its current level of military activity while pursuing diplomatic avenues that could ease some external pressures. Observers note that any significant shift—whether in missile capabilities or nuclear negotiations—will depend on broader geopolitical dynamics, including the actions of the United States, European Union, and regional allies.
