The aftermath of missile strikes at Baghdad Airport. Iraqi Press Office, via AP.
On Friday, January 3, 2020, the United States assassinated General Qasen Soleimani at Baghdad Airport. Much has already been discussed in the media about this issue. The main point is that as the head of Iran's The Quds Force, an elite unit of the Iranian Revolutionary Guard Corps (IRGC), and as basically the coordinator of Iran's clients in the Middle East (Hamas, Hezbollah, Assad, and the Houthis) -- or as Andrew Exum called "the adult supervision in the room"-- his killing could open a can of worms and cause even more instability in the Middle East.
The question, however, is how much pain Iran is willing to inflict on the United States in order to avenge General Soleimani? Is Iran willing to escalate the situation by launching more attacks on Saudi's oil installations, or even hitting Israel?
In order to answer that question, first we need to identify what Iran's interests are. Iran's goal is to maintain its security by establishing and maintaining client states and organizations, notably Lebanon's Hezbollah, Syria's Assad, Yemen's Houthis, and Hamas in Palestine. And in order to control its clients, Iran has to make sure that it is seen as capable of defending those clients.
So far Iran manages to do so by propping up Assad, maintaining Hezbollah's supremacy in Lebanon, supporting Hamas' control over Gaza Strip, assisting the Houthis, and working as the key player behind the scene in Iraq. Iran, in turn, was rewarded by receiving loyalty from those clients. And in some cases, it is willing to assist its clients in causing pain to their opponents, such as by hitting Saudi refineries and, lately, by attacking the American military bases and even an American embassy through its proxies. Iran gambled that as long as it did not escalate things too much, it could increase its prestige at the expense of both the US and the Saudis.
The problem is that the attack on the embassy in Iraq rattled the United States, and was basically was seen by Trump as an attack on his credibility. Keep in mind that Trump was fond of using "Benghazi," an attack on the US consulate in Libya and the murder of the US ambassador there during Obama and Hillary's watch, as a rallying cry to show how weak US credibility was under both Obama and Clinton. The attack on the US Embassy in Iraq could have been a major embarrassment for Trump. With that in mind,Trump chose to escalate things drastically by assassinating General Soleimani, essentially warning Iran that none of its top leaders would be off limits should push come to shove.
At this point, Iran's choices are unpalatable. It could escalate things further, such as by attacking US military bases, but it would lead to a war that Iran does not want and cannot not afford. Its economy is in shambles, and the recent demonstrations showed that the regime is so deeply unpopular that it had to act violently to maintain order in the country. Embarking on a war with the US would basically decimate the regime. Moreover, it is very doubtful that both Russia and China will be willing to go to the mat against the US for the sake of defending Iran.
At the same time, Iran cannot simply stay silent, as it would risk its credibility among its clients. It would also risk its prestige. After all, what kind of signal does it send if Iran cannot do anything to avenge the killing of its top commander? Furthermore, what if Trump or Netanyahu becomes bold enough to assassinate Iran's important clients such as Nasrallah, the head of Hezbollah?
I suspect Iran could retaliate by escalating low intensity attacks (e.g. using Hezbollah or the Houthis to attack US clients in the region, such as Saudi Arabia). It might hijack oil tankers belonging to Western nations, like what happened a few months ago, or even cause problems with oil shipping in the Gulf. America's lack of response to Iran's attack on Saudi's oil installations basically showed Iran that the US would not retaliate if it could keep the damage low enough. At bottom, Iran will try to make America's life difficult, but its moves will be far short of declaration of war, or even a major attack on US global interests.