UN nuclear weapons inspectors and the U.S. Department of Defense believe that Iran has produced enough enriched uranium for one nuclear weapon, but is years away from having enough for several. The Iranian goal, as far as their Arab neighbors, and Israel are concerned, is to build several nuclear weapons, successfully test one, and use the rest as a credible threat. At that point, Iranian threats will carry much more weight. Iran has a long list of demands. Iran has openly claimed southern Iraq (because of the major Shia holy places there, not the oil, but you can't have one without the other) and western Saudi Arabia (again, because Iran feels itself morally superior and better suited to being the "Guardian" of the holy places). Since Iranian forces would have to pass through the Saudi oil fields on the way to Mecca and Medina, and because the population of eastern Saudi Arabia has a large Shia minority, the Iranians would get that oil as well. Kuwait, with its large Shia minority, is also in the way. This scenario, with Iran grabbing half the world's oil reserves, and controlling about five times as much oil as it currently has, is very real to most Arabs. For thousands of years, "the Persians" have been the most powerful force in the region. The Arabs were on top for a few centuries over a thousand years ago, but that was seen, by Iranians and Arabs alike, as the exception, not the rule, to the way things work in this neighborhood.
Saudi Arabia has tried backing Sunni Arab groups in Lebanon and Gaza, to oppose the Iranian backed Hezbollah and Hamas. So far, these Saudi efforts have failed, largely because the Iranians have been backing their client groups for decades. The Arabs have only recently gotten serious about supporting opposition to Hezbollah and Hamas. This has included closer, but very discreet, relations with Israel. But if the Saudis, and other Arab states, keep at it, they will start gaining traction in a few years.
Israelis are now openly discussing using their Jericho ballistic missiles to damage and slow down the Iranian nuclear weapons program. While this might trigger a counterattack with Iranian ballistic missiles, Israelis has a working anti-missile system. For decades, the Jericho missiles were believed armed with nuclear weapons, as the ultimate deterrent to any major attack on Israel. But the Jericho can also a .75 ton conventional warhead.
Iran claims that, when it was preparing to launch its first satellite last month, "hostile unmanned aircraft" interfered with Iranian communications and delayed the launch. American UAVs are not known to carry electronic warfare equipment, and communicate via satellite data links, which would not interfere with any local communications. Thus this claim is apparently just another part of the general Iranian hostility to the West, and a useful excuse for delays in the launch.
The U.S. Air Force confirmed that it shot down an Iranian Ababil UAV over Iraq last month. This is a 183 pound aircraft with a range of about 200 kilometers. The Iranian UAV was believed to be scouting smuggling routes, to be used to get weapons and agents into Iraq. Iran has said it has larger UAVs, using largely off-the-shelf technology, with a range of nearly 1,000 kilometers. Iran has also tested a new, half ton, air-to-surface anti-ship missile, with a range of 110 kilometers. This is another in a long line of Iranian designed and built weapons that are announced with much fanfare, but then tend to never be seen again.
Russia admitted that it signed a deal, two years ago, to sell Iran a billion dollars worth of S-300 anti-aircraft missile systems. Russia has shipped some components, and trained some Iranian troops, but has not completed delivery. That's because Russia has been negotiating with the U.S., Israel and European nations, to obtain a bribe of sufficient size to make it worthwhile to lose the sale to Iran. This has not pleased the Iranians, but there's not much they can do about it.
It was revealed that a senior Iranian defense official, who defected two years ago, revealed that Iran has organized and subsidized a Syrian effort to build nuclear weapons. Iran hired North Korea to provide technical advice and hardware (including nuclear material). Iran, of course, denies all, but UN inspectors have found evidence of nuclear material from North Korea at the Syrian site.
March 21, 2009: The newly installed U.S. president issued a "happy new year" video (celebrating the traditional Iranian new year, which occurs on the first day of Spring) that was intended to make nice to the Iranian leadership, and renew relations with Iran. In response, Iran demanded a large bribe and many apologies for real or imagined American sins against the Iranian people. Some have decided that this response was positive, others are not so sure.
March 14, 2009: An Iranian Air Force Su-24 crashed while landing at the main airport outside the capital. The Russian made aircraft was designed three decades ago to compete with the U.S. F-111 (which has since largely been retired). Iran's air force is equipped with elderly and poorly maintained aircraft. Sanctions make it difficult to get spare parts, and the country has not been able to built refineries to produce large quantities of aircraft fuel. Thus warplane pilots don't get much time in the air. When you have unreliable, elderly, aircraft and inexperienced pilots, you don't have much of an air force at all.
March 13, 2009: The U.S. has extended sanctions against Iran for another year. This list of sanctions was first imposed in 1995.