The U.S. and Iran appear to have taken a step back from escalating hostilities triggered by the U.S. killing of top Iranian general Qasem Soleimani — but analysts warn "Iran is not finished with its retaliation."
They say Iran's vow to retaliate could take years to play out.
Tensions ratcheted up this week, following an airstrike ordered by President Donald Trump that killed Soleimani in Baghdad on Friday. Iran retaliated on Wednesday and blasted missiles at two Iraqi bases where U.S. soldiers were housed — no Americans were killed in the attacks.
After the attacks, Trump said on Twitter: "All is well!" He later spoke from the grand foyer of the White House, and said Iran "appears to be standing down" and even suggested that the U.S. was open to negotiations with Tehran.
"Since there were no casualties, President Trump seems to be taking the opportunity to say this is the end of this round. That's a hopeful sign, (but) it doesn't mean this is the end of this conflict," said Daniel Shapiro, who was the U.S. ambassador to Israel between 2011 and 2017.
He warned that the supposed a deescalation in tensions could be "fragile."
"It's very likely that the Iranian response to the death of Qasem Soleimani will play out over weeks, or months or perhaps even years," Shapiro said, adding that Iran has a network with the capability to attack U.S. and Israeli targets in the Middle East region.
"We shouldn't believe that the accounts are completely settled," he warned.
"It's perhaps too early to tell" if Iran sees the attacks on U.S. targets as an incomplete mission given the lack of fatalities, the U.S. military's top general told reporters Wednesday, according to Reuters.
Chairman of the Joint Chiefs of Staff Gen. Mark Milley added that he and others in the military "fully expect" Iran-backed Shiite militia groups in Iraq to execute attacks against American forces in Iraq and Syria, the news agency said.
In fact, Iran on Wednesday suggested it was not done. Iran's supreme leader Ayatollah Ali Khamenei said in a speech hours after the strikes on the American targets that "such military actions are not enough."
There's a "long and rocky road ahead," said Heather Williams, Rand Corporation's senior policy researcher.
"Iran is not finished with its retaliation ... this is kind of the first strike, or token of symbolic response," she concluded. "There's likely still more to come from the Iranians, just not something in the very immediate future."
One good sign for markets, however, is that full-blown war isn't expected ahead.
While both Iran and Trump have been "very tough with their rhetoric," they have signaled that they both want to deescalate — appearing to be "pointing to actions that are more in the diplomatic and economic ground," pointed out Lincoln Bloomfield, chairman emeritus at the Stimson Center.
"They needed to save face — Iran needed to show its people they punched back after the loss of their general, but they did it in a way that didn't provoke war. I think President Trump is well known, that he does not want war either," he told CNBC on Thursday.