Global oil prices climbed sharply on Wednesday after the United States launched airstrikes on Iranian targets and Iran retaliated by striking US military facilities in Bahrain and Kuwait, raising fresh concerns over energy supplies and shipping through the Strait of Hormuz.
The latest escalation came hours after Washington revoked a licence that had temporarily allowed Iran to export oil under an interim agreement, restoring restrictions on Iranian crude sales. The decision followed attacks on commercial vessels in the Strait of Hormuz, one of the world's most important energy transit routes.
The renewed conflict has heightened fears of disruptions to global oil flows, as the Strait of Hormuz carries a significant share of the world's seaborne crude oil and liquefied natural gas (LNG) exports. The military exchanges have increased uncertainty over the security of commercial shipping, prompting a sharp rise in international oil prices.
US President Donald Trump later declared the interim agreement with Tehran effectively over, although he said diplomatic talks could continue.
“I think it’s over,” Trump said when asked about the status of the agreement, adding that negotiations could proceed but expressing little confidence in their success.
The US military's Central Command said its operation targeted Iranian air defence systems, radar installations and more than 60 fast boats operated by the Islamic Revolutionary Guard Corps. It said the strikes were intended to impose costs for attacks on commercial shipping in international waters and warned Washington remained prepared to respond if Iran failed to honour any future agreements.
Iranian state media reported explosions in several locations, including Bandar Mahshahr, where a Revolutionary Guard member was killed, and Bushehr, home to Iran's nuclear power facilities.
Shortly afterwards, Bahrain and Kuwait activated missile alerts as Iran's Revolutionary Guard confirmed attacks on US military installations in both countries. The exchange echoed last month's confrontation, when attacks on commercial shipping prompted US retaliation and Iranian missile strikes on US facilities in the Gulf.
The United Arab Emirates condemned Iran's actions, with senior diplomat Anwar Gargash saying the attacks demonstrated Tehran's unwillingness to pursue de-escalation.
The maritime security situation also deteriorated after a tanker carrying Qatari natural gas caught fire off the coast of Oman after being struck, according to the United Kingdom Maritime Trade Operations centre. Iran's state television said the vessel had ignored warnings before the incident but stopped short of claiming responsibility.
Qatar condemned the attack as an unacceptable assault on international navigation and global energy security, saying Iran bore legal responsibility. Two other commercial vessels sustained minor damage but continued their voyages without casualties.
Under the interim agreement, Iran and the United States had agreed to allow unrestricted transit through the Strait of Hormuz for 60 days. Tehran had argued that it should regulate vessel movements and eventually impose transit fees, a proposal rejected by Washington and Gulf Arab states.
The military escalation unfolded during funeral ceremonies for Iran's Supreme Leader Ayatollah Ali Khamenei, who was killed on 28 February during the opening phase of the conflict. Negotiations over Iran's nuclear programme and the reopening of the Strait of Hormuz had been expected after the funeral, but the latest hostilities have cast doubt over those plans.
Iranian Parliament Speaker Mohammad Bagher Qalibaf said Tehran would not yield to pressure.
“The era of bullying and extortion is over,” he wrote on X.
Funeral ceremonies continued in Iraq's holy city of Najaf, attended by Iranian President Masoud Pezeshkian and senior Iraqi officials, before further services scheduled in Karbala. Khamenei's son and successor, Supreme Leader Ayatollah Mojtaba Khamenei, has not appeared publicly and is believed to be in hiding after reportedly being injured in the strike that killed his father. Khamenei is expected to be buried on Thursday at the Imam Reza shrine in Mashhad, his birthplace.
