Iran warns of regional escalation as US sets deadline for Tehran
Tensions peak as Washington issues a two-to-three-day ultimatum for a diplomatic deal, coinciding with US stock gains and a high-stakes trade summit in Beijing.
Iran’s Islamic Revolutionary Guard Corps issued a stark warning on Wednesday, stating it would extend the ongoing Middle East conflict beyond the region if the United States and Israel resume military attacks against Tehran. The threat from the Revolutionary Guard marks a significant escalation in rhetoric as diplomatic pressures mount on Tehran to reach a settlement.
The warning comes in the wake of a strict directive from US President Donald Trump, who has set a two-to-three-day deadline for Iranian officials to finalise a diplomatic deal to end the war. Prior to this ultimatum, President Trump had indicated that he had delayed a major assault in hopes of securing a peace agreement, although tensions have since risen sharply with renewed threats of strikes.
US Vice President JD Vance stated that both sides have made "a lot of progress" in negotiations, suggesting that the window for a diplomatic breakthrough remains open. However, the Revolutionary Guard’s statement implies that any return to active hostilities would trigger a broader geopolitical response, potentially opening new fronts and bringing "many more surprises" to the conflict zone.
Amidst the geopolitical volatility, US financial markets posted gains on Thursday. The Dow Jones Industrial Average rose 0.8%, the S&P 500 climbed 0.3%, and the Nasdaq Composite increased by 0.2%. Nvidia shares surged more than 2% after the US approved the sale of H200 chips to Chinese firms, providing a positive catalyst for technology stocks.
The market movements occurred as President Trump arrived in Beijing for a two-day summit with Chinese President Xi Jinping, beginning on 14 May 2026. The agenda for the summit includes discussions on trade, artificial intelligence, and regional tensions, with the Iran situation forming part of the broader context for US-China relations.
