Washington may be weighing a tactical nuclear strike on Iran's deeply buried nuclear site, a move that would mark a dangerous new level of escalation even as some diplomatic signals briefly lifted markets.

• US pressure on Iran is building ahead of midterm elections, with talk of a tactical nuclear weapon aimed at a heavily fortified underground enrichment site.
• Iran has warned that any attack would trigger continuous strikes on US bases in the region and could extend to US naval forces.
• Diesel and fuel prices are climbing because refineries and oil tankers keep getting hit in the fighting, a problem separate from any oil shortage itself.
• Iran's president is set to address the UN General Assembly, and hints of diplomacy briefly pushed stocks up and oil prices down, even though the underlying risk hasn't gone away.
• Trump's approval rating has dropped to its lowest point yet, adding political pressure as he weighs how to respond to Iran.

Outlook: Tensions stay high and economically painful even if the war doesn't escalate further, with any actual strike risking a much bigger regional conflict.