This week the world will see how Tehran responds to the messages received at the UN General Assembly summit in New York. It was made clear that the US, Saudi Arabia, the UAE and other Gulf nations do not want war but a diplomatic process that would induce Iran to change its behaviour in return for a progressive adjustment in sanctions.
So far, sources say the Iran's Islamic Revolutionary Guard Corps see this message as an opportunity to further unshackle their hands by contemplating more attacks against vital installations in Saudi Arabia. In their view, countries seeking to avoid war will not respond while in Washington, the US president has made it clear that his policy is to respond to Iranian escalation solely by stepping up sanctions, unless the IRGC crosses a red line and targets US soldiers. For now, the IRGC will veer clear of this line, given the cost and that its main goal is a show of strength to the Gulf countries and not weakness where Washington is concerned.
It is likely, therefore, that the IRGC will engage in new provocations that could go beyond Saudi Arabia. The sources said IRGC commanders want to provoke a response but also want to be certain it will not be a serious one. In other words, as long as the US refrains from responding militarily, the Iranian leadership feels it can continue its bullying without paying a price.
Regime leaders are viewing Mr Trump's position through the prism of the Carter Doctrine, offering US protection of Arab Gulf countries since the time of former president Jimmy Carter. The current US president is not as willing to defend allies from aggression from their neighbours, as former president George Bush did following the Iraqi invasion of Kuwait. In Tehran's view, Mr Trump's position exposes a structural weakness in the security alliance between the US and Saudi Arabia in particular. Regime leaders thinks he is unlikely to go to war with Iran to defend Gulf allies.
While Mr Trump has made it clear that he will not be lured into war, it is also true that sanctions remain a powerful weapon and the cornerstone of the US administration's strategy. While economic strangulation has not yet reined in the IRGC and might have initially even prodded it into vengeful strategic recklessness, the consistency of the sanctions will eventually force Tehran to pursue one of two options: either to adjust its behaviour to protect the supreme interests of Iran and her people, or risk self-destruction. Betting on continued US reluctance to engage in a military confrontation is precarious and costly and Mr Trump has proven to be a man of surprises.
The attack on Saudi Aramco oil facilities has produced the opposite of what Iranian diplomacy was seeking to achieve, especially with regards to European powers. For a long period now, Iran has been trying to drive a wedge between Nato member states, hoping EU nations would be able to find a mechanism for Iran to sell its oil and circumvent US sanctions.
Following the attacks on Saudi Aramco, European reactions have caused a real setback for Tehran's grand designs. A statement was issued by France, Britain and Germany last week, blaming Iran for the attacks and urging Tehran to engage in dialogue and refrain from provocation and escalation. The attacks also prompted Britain to break away from the European consensus on maintaining the existing 2015 nuclear agreement with Iran, with British Prime Minister Boris Johnson saying the time had come to negotiate a new deal, all but endorsing Mr Trump's position.
What is more, the attacks have invited new US sanctions on Iran's central bank and other entities, making it very difficult to execute any European mechanism to circumvent sanctions through a financial vessel, since no European bank would risk being hit by US sanctions.
The IRGC has effectively shot itself in the foot by deciding to expand its escalation to oil facilities. And if it sustains this path and carries out new major attacks, it will only make matter worse for Iran.
There are still those in Tehran who are invested in the Europeans' supposed ability to influence the US to reduce sanctions. Some in Tehran think brinkmanship could force Mr Trump to back down. But the opposite has happened so far. Iran has ended up increasing its isolation and appeared to its Russian and Chinese partners, and its European friends, as a reckless state, especially after it targeted oil facilities. Ultimately, Mr Trump is benefiting because he appears to be the one refusing to take military action as long as his maximum pressure policy is working.
Iran's leaders could benefit from the US self-restraint, which should not be confused for cowardice. Rather, it is a cunning policy that Tehran would be unwise to dismiss, because each escalation will invite further devastating sanctions and bring Europeans ever closer to the US.
Iran's leaders must admit to their people that all talk of preserving the nuclear deal is a fallacy. There is division between European powers about the merits of the deal and now, there is little choice but to negotiate a new agreement with Mr Trump that addresses the flaws in his predecessor Barack Obama's deal with Iran.
Iran's leaders must tell their people frankly that all European efforts and initiatives are dead in the water, with no other options but to engage in new negotiations, which cannot realistically be held under Iran's preconditions of lifting sanctions first. If Iran really wants to avoid war and internal collapse, it has to reconsider its position and be ready for dialogue.
This brings us back to the logic of the regime born in Tehran four decades ago. This regime engaged in regional, sectarian and religious wars and today is in dire need of reform. Iran is the only state in the world that wants the world to respect and accept its founding, funding and training of extraterritorial, irregular armies and proxies in sovereign countries such as Lebanon, Iraq, Yemen and Syria, believing this to be a legitimate right.
To succeed, any collective diplomatic effort seeking to avoid war and step out of the failed nuclear deal must include international and European confrontation of this terrible flaw in the regime's logic, and demand reform to uphold the sovereignty of states as per the UN charter. It is futile to continue turning a blind eye to this problem in the name of realpolitik and the present situation affords an opportunity to end devastating wars and impose much-needed legitimate reform.
The decision is in the hands of both the leaders and the people of Iran. The indications coming from the IRGC are not reassuring, perhaps because reform poses an existential risk to its raison d’etre. The fear remains that Tehran's leaders, especially the supreme leader and IRGC, think the only way to save their regime from having to reform is war.