Tensions between the U.S. and Iran are intensifying. What might come next?

The downing of a U.S. drone by Tehran is fuelling fears of war between the U.S. and Iran. 

Tensions have been rising over the past year since U.S. President Donald Trump pulled Washington out of a multi-party nuclear deal with Tehran aimed at limiting the country's ability to develop a weapons program. 

Since then, the U.S. has classified Iran's Islamic Revolutionary Guard Corps as a terrorist organization — the first time this designation has been placed on a branch of a country's military. 

Last month, the U.S. sharply tightened sanctions on Iran's oil exports, attempting to cut Tehran's economic lifeline. 

Iran, meanwhile, has been blamed for sabotaging oil tankers in the Gulf earlier this month ahead of Thursday's drone downing. 

"We have settled into a dangerous tit-for-tat escalation pattern," said Kaleigh Thomas, a Middle East researcher with the Center for New American Security think-tank in Washington.  

Late Thursday night, a U.S. official told The Associated Press plans to launch missiles at targets in Iran had been made in response to the drone downing, but approval for the attacks was withdrawn abruptly.

The White House declined to comment when The Associated Press asked for more detail, and it wasn't immediately clear how far the preparations had gone. 

The chances of a direct military conflict aren't much higher than they were last week, Thomas said in an interview, but in a "worst-case scenario" a "miscalculation by the U.S. or Iran ... sparks an action that takes us toward war." 

For many, echoes from the invasion of Iraq loom large amid the current war of words.

CBC News breaks down the current tensions, the stakes and what could come next.

How close is the U.S. to an all out war with Iran? 

The rhetoric is heated. From tanker sabotage, to the drone downing and proxy conflicts boiling around the Middle East, the situation on the ground is growing increasingly tense. 

However, analysts said the odds still don't favour a full-blown military conflict. 

Both sides have said they don't want war. 

"We don't seek war, but we will zealously defend our skies, land & water," Iranian Foreign Minister Javad Zarif said Thursday on Twitter. He accused the U.S. of lying about where the drone was shot down and threatened to take Washington to the UN. 

Amid tough talk, Trump, who campaigned for the presidency by pledging to wind down U.S. conflicts overseas, said Iran "probably" made a mistake in shooting down the drone, essentially leaving open the possibility for de-escalation. 

Unlike the leadup to the invasion of Iraq, the U.S. has not moved thousands of additional troops to the Middle East, said Brian Katulis, a senior fellow for national security at the Center for American Progress, a research group linked to U.S. Democrats. 

"This could escalate pretty quickly — not into a full blown conventional war like 2003 (in Iraq) — but something that is quite ugly and persistent." 

In Syria, the U.S. and western allies launched a series of missile strikes at what they said were chemical weapons facilities last year.

The strikes drew condemnation from Syrian authorities, and bipartisan praise from U.S. lawmakers. But they did not influence the broader course of the war or lead to broader military hostilities between Washington and Damascus. 

If traditional war is unlikely, what about hybrid conflict? 

Essentially, that's already underway. 

Few 21st century conflicts — especially between countries with significant militaries — involve all-out war or a clear frontline. 

Proxy conflicts between groups linked to Iran and others backed by the U.S. and its regional allies, including Saudi Arabia, are playing out in Yemen, Syria and Iraq — along with in the oil business and cyberspace.

They could easily spill into other parts of the Middle East. In Iraq, where Tehran holds sway over powerful Shia militias, the U.S. evacuated hundreds of diplomatic staff from its Baghdad embassy last month, citing threats from Iran. 

What could spark a war? 

U.S. "red lines" for full-blown war likely include direct Iranian attacks on American troops in the region or attempts to shut down the Strait of Hormuz, the world's most important choke point for oil transit, said Thomas. 

"I think Iran is marching pretty close to the U.S. red line," said Ryan Costello, policy director at the National Iranian American Council, a non profit which says it represents people of Iranian heritage in the U.S.

"And the U.S. is considering reprisals that would go beyond Iran's red lines."

Why is this intensifying now? 

Since the U.S. pulled out of the nuclear deal last year, Iran had been hoping that European countries, Russia and China would defend the agreement and Tehran's ability to export oil, said Thomas.

That hasn't happened and oil exports have tanked, along with Iran's economy. 

"A lot of this dates back to the acceleration of Trump's maximum pressure campaign on the one year anniversary of the U.S. pulling out of the nuclear deal," said Costello. 

Iran waited with restraint for a year and "got nothing out of it," he said. 

Now, he said, Tehran has launched provocative actions to try and push Trump back to the negotiating table. 

"They are engaging in a series of escalations but they are trying to stop short of something that triggers war," Costello said. 

What about domestic politics? 

In Tehran, the disintegration of the 2015 nuclear deal was a boost for hardliners and a blow to President Hassan Rouhani, who is seen by many as a pragmatist. 

The foreign policy team in the Trump administration now has a strong cohort of veteran neo-conservatives —notably national security adviser John Bolton, a key architect of the 2003 invasion of Iraq.

Trump, in contrast, "has a gated community approach: build big walls in America and not worry about what's on the other side," said Katulis from the Democrat-linked think-tank.

Trump's team has said legislation passed in the U.S. following the 9/11 attacks allow them to strike Iran without congressional approval. Many U.S. lawmakers disagree with that assessment and congressional leaders are demanding authorization for any military strike.  

What happens next? 

A realistic best-case scenario involves both sides cooling off and establishing direct communication lines, especially between military leaders, said Thomas.

"The U.S. and Iran have no dialogue patterns aside for Twitter rhetoric," she said. "One could easily misinterpret an action of another."

A miscalculation or aggressive action targeting Iran by a regional state, in contrast, could ignite conflict, she said. 

Brian Katulis, a fellow at the Center for American Progress who meets with decision makers in the Middle East monthly, echoed that view. He compared the current situation to the 1980s when sparring between Tehran and Washington in Gulf waters led to increased strife but not full blown conflict. 

Trump, for his part, was asked about the possibility for conflict following a meeting with Canadian Prime Minister Justin Trudeau on Thursday. 

In response, Trump said: "You'll soon find out."