There --- many difficulties regarding the situation.

Explanation

The correct answer is 'were' because it matches the plural subject 'difficulties.' The sentence 'There were many difficulties regarding the situation' indicates that multiple challenges existed in the past. The use of 'were' properly reflects the plural nature of the subject. The other options are incorrect because 'should' and 'is' do not fit the required verb form for plural subjects, while 'was' is a singular past tense verb that does not agree with the plural subject 'difficulties.'