Persistent military conflict and absence of any bilateral diplomatic channel explain traders' near-certainty that Israel will not reopen an embassy in Iran before year-end. Direct relations have not existed since 1979, and 2026 saw U.S.-Israeli strikes on Iranian targets in February, Iranian missile and proxy responses, a brief June memorandum of understanding, and renewed Hormuz and nuclear tensions into October. Recent statements from both sides emphasize mutual accusations and demands for guarantees rather than normalization. A realistic shift would require a comprehensive ceasefire, verified de-escalation on nuclear and proxy issues, and high-level agreement—developments that remain absent amid stalled talks and ongoing regional friction.