• Syria has been rocked by 13 years of civil conflict, sparked by the March 2011 pro-democracy demonstrations against repressive governmental rule.
• The Syrian escalations take place as Assad's allies Russia and Lebanese militant group Hezbollah have been increasingly distracted by battle on their own home fronts, engaging Ukraine and Israel, respectively.
• Markets have been watching the military developments for signs of an impact on supplies in the oil-rich Middle East, as well as further trade disruptions along critical trade routes.

The more than 50-year Assad dynastic dictatorship was on the cusp of collapse on Sunday, as rebel forces seized the capital of Damascus in a lightning offensive that has swept the country's largest cities in a matter of days.

The defense forces of the Russia and Iran-backed government have been struggling to stymy the rebel advance that kicked off with the rapid sweep of northern city Aleppo last week, breaking a years-long stalemate. The attack has been led by the Islamist militant group Hayat Tahrir al-Sham (HTS) —  which the U.S. and U.N. Security Council designated as a terrorist organization — and its allies, who have widened the scope of their campaign to the south of the country and now also captured the key cities of Hama and Deir el-Zor.

"We declare the city of Damascus free from the tyrant Bashar al-Assad," Hassan Abdul-Ghani, senior HTS commander, said in a post on WhatsApp. "To the displaced people around the world, Free Syria awaits you."

CNBC could not independently verify developments of the ground.

The whereabouts of President Bashar al-Assad, who assumed leadership in 2000 after the death of his father Hafez, were uncertain. Multiple media reports, which CNBC could not independently confirm, state he has fled Damascus. The Russian Foreign Ministry later on Sunday said that Assad had decided to leave his presidential post and the country.

Syrian Prime Minister Ghazi al-Jalali said he remained at his home and was prepared to support the continuity of Syrian governance.

"We believe that Syria belongs to all Syrians and to all its citizens, and that this country can be a normal state, one that builds good relations with its neighbors without entering into any regional alliances or blocs," he said, according to NBC News reporting. "This matter is left to any leadership chosen by the Syrian people, and we are ready to cooperate with them by providing all possible facilitation."

The U.N. Special Envoy for Syria Geir Pedersen on Sunday stressed this is a "watershed moment" in the Syrian civil war, calling for "stable and inclusive transitional arrangements."

Several nations have evacuated their embassies amid the Damascus conflict, with outgoing U.S. President Joe Biden "closely monitoring" the events and retaining contact with regional partners, according to White House National Security Council Spokesman Sean Savett.

Distracted allies

The advance on Damascus comes after militants reached Homs – the country's third-largest city and a chokepoint between rebel-held territories and the capital city. Holding Homs would pose significant challenges for the rebels, who would have to confront a concentration of government forces and gain the support of local pro-Assad Alawite communities, Atlantic Council Senior Fellow Qutaiba Idlbi wrote on Dec. 5.

"More importantly, the rebels advancing toward Homs will test Russia's redlines in Syria. So far, Russia has been absent from providing serious military support to uphold Assad's defenses across areas he's losing to the rebels," Idlbi added. "While Russia has conducted some airstrikes in Idlib and Aleppo to counter rebel advances, it has not engaged directly in Hama. This restraint reflects Moscow's strategic calculations to avoid overextension."

Syria has been rocked by 13 years of civil conflict, sparked by the March 2011 pro-democracy demonstrations against repressive governmental rule, in lockstep with similar regional uprisings during the Arab Spring. The Assad administration answered the Syrian protests with deadly force, leading to calls for his resignation, nationwide unrest and the rise of opposition groups. Peace talks carried out separately by the U.N. and by Russia, Iran, and Turkey have yet to bear fruit.

The Syrian escalations take place as Assad's allies Russia and Lebanese militant group Hezbollah have been increasingly distracted by battle on their own home fronts, engaging Ukraine and Israel, respectively. The Syrian unrest exacerbates the broader conflict in the Middle East, which was set off in October 2023 by a terror attack perpetrated by Palestinian militant group Hamas in Israel, leading to the Jewish nation's retaliatory military campaign in the Gaza Strip and to its fire exchanges with Hezbollah, Yemeni Houthi and Iran.

"This lightning-fast offensive is a monumental shift in the Syrian conflict and highlights the regime's inherent weakness," wrote Natasha Hall, a senior fellow with the Middle East Program at the Center for Strategic and International Studies, further noting that the "fragile stasis collapsed as Assad's allies, Iran and Hezbollah, have been significantly weakened" by Israeli military offensives, while "Russia has been bogged down in Ukraine and unrest in Georgia."

In an update on his Truth Social platform, U.S. President-elect Donald Trump suggested Assad's "protector, Russia, Russia, Russia, led by Vladimir Putin, was not interested in protecting him any longer. There was no reason for Russia to be there in the first place. They lost all interest in Syria because of Ukraine."

Markets have been watching the military developments for signs of an impact on supplies in the oil-rich Middle East, as well as further trade disruptions along critical trade routes.