US & Israel Launch Major Strikes on Iran
In a major escalation, U.S. and Israeli forces have launched major strikes against Iran, with explosions reported in Tehran. President Trump announced “major combat operations” and called on Iranians to overthrow their government. A geopolitical podcast immediately highlighted the risk to the Strait of Hormuz, with war risk premiums and oil freight rates already surging on the news.
The strikes follow a significant escalation in the long-running proxy war between Israel and Iran, which shifted to direct military exchanges in 2024. A brief but intense "Twelve-Day War" in June 2025 saw the U.S. join Israeli strikes on Iranian nuclear facilities at Fordow, Natanz, and Isfahan, marking the first direct U.S. attack on major Iranian sites since 1979. Disruption to the Strait of Hormuz is a primary concern, as the chokepoint handles over 20% of global oil and liquefied natural gas (LNG) exports. Roughly 84% of crude oil and 83% of LNG transiting the strait is destined for Asian markets, meaning US manufacturers face indirect impacts through global price volatility and supply chain disruptions for their international operations and partners. These military actions compound existing commercial risks for manufacturers. U.S. Executive Order 13902 already imposes secondary sanctions on any entity, regardless of nationality, operating in Iran's construction, mining, manufacturing, or textiles sectors. This creates significant compliance exposure for firms whose global supply chain partners may have undisclosed dealings with Iranian entities. The conflict forces immediate logistical recalculations. Maritime carriers are already rerouting vessels away from the region and around Africa's Cape of Good Hope to avoid risk. These detours can add up to two weeks in transit time and increase fuel consumption by 40%, directly impacting production schedules, inventory carrying costs, and working capital for manufacturers reliant on timely shipments. The SEC now requires public companies to disclose their processes for managing material risks from cybersecurity threats, with geopolitical instability being a key driver of such threats. Recent guidance also mandates the disclosure of a material cybersecurity incident on Form 8-K within four business days of determination, increasing pressure on audit committees to have robust systems for identifying and escalating such events. This escalation elevates the role of internal audit beyond traditional compliance. Audit functions are now expected to provide assurance on the company's resilience to geopolitical shocks, advising on the effectiveness of risk management frameworks for everything from supply chain diversification and critical materials sourcing to sanctions compliance and scenario planning for sudden trade policy shifts. Any resulting supply chain shifts will trigger new regulatory scrutiny from domestic agencies. Sourcing from new jurisdictions requires immediate due diligence on differing local standards that may conflict with or add to existing compliance obligations under the EPA's Toxic Substances Control Act (TSCA) and OSHA's worker safety regulations.
