Iran Warns Oil Could Hit $200 as Gulf Ship Attacks Escalate War

BY COMFORT OGBONNA

Iran said the world should be prepared for oil prices to reach $200 per barrel as its forces attacked merchant ships on Wednesday in the blockaded Gulf.

Iran also launched strikes at Israel and targets across the Middle East, demonstrating it can still retaliate despite what the Pentagon has described as the most intense U.S.-Israeli attacks so far.

Oil prices, which surged earlier this week, have since eased while stock markets rebounded. Investors appear to be betting that U.S. President Donald Trump will find a quick way to end the war he began alongside Israel nearly two weeks ago.

Trump, who has repeatedly tried to reassure markets that the campaign will end soon, said in a phone interview with Axios that there was “practically nothing left” to target in Iran.

“Little this and that… Any time I want it to end, it will end,” Trump said.

Despite those comments, there has been no sign of fighting easing on the ground, and ships remain unable to safely pass through the Strait of Hormuz. Around one-fifth of the world’s oil normally moves through the narrow waterway along the Iranian coast, making the blockade the worst disruption to energy supplies since the oil shocks of the 1970s.

The International Energy Agency, made up of major oil-consuming nations, recommended releasing 400 million barrels from global strategic reserves to stabilise prices. The proposal, the largest intervention of its kind, was quickly endorsed by Washington. However, the rate at which countries can release those reserves would replace only a fraction of the supply usually passing through the Strait of Hormuz.

“Get ready for oil to be $200 a barrel, because the oil price depends on regional security, which you have destabilised,” said Ebrahim Zolfaqari, spokesperson for Iran’s military command, in comments directed at the United States.

Oil prices briefly surged to nearly $120 per barrel on Monday but have since settled around $90, suggesting investors expect a quick end to the conflict and reopening of the strait.

Iranian officials indicated on Wednesday that they intend to impose prolonged economic pressure as the war continues. After offices of a bank in Tehran were struck overnight, Zolfaqari said Iran would also target banks that do business with the United States or Israel. He warned people across the Middle East to stay at least 1,000 metres away from bank buildings.

Iran’s Revolutionary Guards said their forces fired on two ships in the Gulf that had disobeyed their orders. One vessel, a Thai-flagged bulk carrier, was set on fire, forcing crew members to abandon ship. Three people were reported missing and believed trapped in the engine room.

The Guards also reported a second incident involving a Liberian-flagged ship, though this could not be independently verified. Two additional vessels — a Japanese-flagged container ship and a Marshall Islands-flagged bulk carrier — were reported damaged by projectiles.

The latest attacks bring the number of merchant ships struck since the war began to 14.

A senior Israeli official said Israeli leaders now privately accept that Iran’s ruling system could survive the war. Two other Israeli officials said there is no indication Washington is close to ending the campaign.

In a show of defiance, large crowds gathered in Iran on Wednesday for funerals of top commanders killed in airstrikes. People carried caskets and waved flags and portraits of slain Supreme Leader Ayatollah Ali Khamenei and his son and successor, Mojtaba.

An Iranian official said Mojtaba Khamenei was lightly wounded early in the conflict when airstrikes killed his father, mother, wife and a son. He has not appeared publicly or issued a direct message since the war began.

Iran’s military said Tuesday it launched missiles at several targets, including a U.S. base in northern Iraq, the U.S. naval headquarters for the Middle East in Bahrain, and locations in central Israel. Explosions were reported in Bahrain, while in Dubai four people were wounded when two drones crashed near the airport.

Residents in Tehran say they are becoming accustomed to nightly airstrikes that have forced hundreds of thousands to flee to the countryside and left the city coated in black rain caused by oil smoke.

“There were bombings last night but I did not get scared like before. Life goes on,” said Farshid, 52, speaking by phone.

U.S. and Israeli officials say their goal is to eliminate Iran’s ability to project military power beyond its borders and destroy its nuclear programme. They have also called on Iranians to overthrow the country’s clerical leadership.

Israel’s Defence Minister Israel Katz said the operation would continue without a time limit.

“The operation will continue without any time limit, as long as required, until we achieve all objectives and win the campaign,” he said.

The longer the war continues, the greater the risk to the global economy. If the conflict ends with Iran’s clerical system still in power, Tehran is expected to claim victory.

Iran’s police chief Ahmadreza Radan warned that anyone taking to the streets would be treated “as an enemy, not a protester,” adding that security forces were ready to act.

According to Iran’s U.N. ambassador Amir Saeid Iravani, more than 1,300 Iranian civilians have been killed since U.S. and Israeli airstrikes began on February 28. Israeli attacks on Lebanon have also killed dozens.

Iranian strikes on Israel have killed at least 11 people, while two Israeli soldiers have died in Lebanon. Washington says seven U.S. soldiers have been killed and about 140 wounded.