The dramatic escalation of hostilities between the US and Iran has put Scott Morrison in a delicate position this week.

He has been extremely careful with his language; neither unequivocally endorsing Donald Trump's decision to order the killing of Iranian general Qassem Soleimani, nor offering any criticism.

On balance, the Australian Government believes it's a good thing General Soleimani is gone, but isn't openly celebrating the execution.

The Australian Prime Minister, as with most of his predecessors, wants to back the US President where he can. This is entirely normal.

What is unusual is the relative restraint in criticising Tehran, even after the Iranian regime lobbed more than a dozen missiles at US bases in Iraq.

Three reasons for restraint

There are three reasons for this temperate response.

Unlike the US, Australia has an embassy in Iran. No prime minister wants to put the lives of Australian diplomatic staff in unnecessary danger.

Secondly, Australia also has a citizen being held in an Iranian jail on espionage charges. Kylie Moore-Gilbert is an Australian-British dual citizen detained more than a year ago and sentenced to a decade behind bars. Negotiations to release the academic continue.

Kylie Moore-Gilbert, a lecturer in Islamic Studies, was detained in Iran. ( University of Melbourne )

Finally, and most importantly, Australia wants to avoid any further escalation in the Middle East. It certainly has no desire to see another full-scale conflict.

As Mr Morrison says, it's a fluid situation. But right now the hope and expectation within the Australian Government are that things won't escalate much further.

No rush to remove Australians

The view is that Iran wanted to demonstrate to its own people that it has responded to the drone strike on General Soleimani, but did not want to provoke an inevitable retaliation from Donald Trump by killing any American forces.

In other words, this was a carefully calibrated show of force from Iran and nothing more. A statement from Iranian Foreign Minister Javid Zarif referred to Tehran having "concluded" its actions. This is a clear sign Iran wants it to end here.

The National Security Committee of Cabinet will discuss the situation tomorrow morning in Canberra, but there's no mood amongst senior ministers to over-react.

Multiple sources insist there will be no rush to pull the 280-300 Australian Defence personnel out of Iraq. Their role in helping Iraqi forces fight Islamic State remains a priority and the ADF leadership is said to be watching very closely but remaining "calm" about any heightened risk they face.

In fact, the deployment of a Navy frigate to the Strait of Hormuz will still go ahead as planned this week, not in response to the latest hostilities, but as part of a commitment made five months ago to protect commercial shipping against Iranian aggression.

The hope and expectation within the Australian Government is that things won't escalate much further. ( AP: Susan Walsh )

This commitment made by the Prime Minister in August met criticism at the time as only the UK and Bahrain had agreed to join the US-led mission. It's now being stressed that Australia has had a frigate on patrol in the Gulf for many years. There's nothing particularly unusual about sending this one and it will still carry out the usual anti-piracy operations and other tasks. In other words, "nothing to see here".

Importantly, this deployment and the Morrison Government's response to the latest flare-up have Labor's support. There is a bipartisan view that Australia has a role to play in the Strait of Hormuz and Australian troops should remain in Iraq as long as Baghdad wants them there.

So right now it's situation normal as far as Australia is concerned.

As is often the case though, no-one is entirely sure what Donald Trump might do if faced with further provocations from Iran, particularly as he heads into an election year.

David Speers is the host of Insiders, which returns to ABC TV on February 2.