war

Israeli Prime Minister Benjamin Netanyahu said several Iranian nuclear scientists were killed in Israeli strikes. He also said a “new path of freedom” for Iran was approaching and told Iranians the country’s future ultimately depends on them.

Iran’s UN ambassador Amir Saeid Iravani said Tehran will not close the Strait of Hormuz and remains committed to freedom of navigation. His remarks came after Supreme Leader Mojtaba Khamenei said the waterway would remain closed to pressure Iran’s enemies. 

WASHINGTON — Days after he was named Iran’s next supreme leader, and over a week since U.S. and Israeli bombing wiped out much of his family, Mojtaba Khamenei issued his first statement on Thursday demanding vengeance against the alliance over the war it unleashed.

He called on Iranian forces to continue thwarting vital shipping traffic through the Strait of Hormuz. He vowed to open new fronts against the United States and Israel. And he warned that Gulf states hosting U.S. bases would remain targets of Iranian attack.

Yet, what concerned the White House most was what the new supreme leader didn’t say.

Khamenei made no mention of a strategic endeavor that had brought the Islamic Republic to war: Its nuclear program, suspected for decades of harboring military dimensions.

The omission was not lost on officials in the Trump administration, who told The Times they are largely in the dark over the new supreme leader’s stance on whether Iran should break out to build a nuclear weapon.

Khamenei’s deep alliance with the Islamic Revolutionary Guard Corps, which has advocated for weaponization in the past, has raised concern that the new leader will depart from his father’s long-standing position against building a bomb.

U.S. intelligence assessments long held that the late ayatollah, Ali Khamenei, had adopted a strategy of remaining at the threshold of developing a nuclear weapon while avoiding the costs and risks of actually building one. In 2003, as the United States invaded Iraq over false claims that Saddam Hussein possessed weapons of mass destruction, Khamenei issued a religious edict — a fatwa — declaring nuclear weapons to be forbidden under Islam.

That doctrine is now in doubt, with the new supreme leader wounded and stewing underground over the U.S. assault that has devastated Iran’s military and killed his father, his mother and his sister, among other family members.

Concern among U.S. officials comes as Trump has expressed interest in ending the war “very soon,” even though a stockpile of uranium — a key ingredient in the construction of nuclear weapons — remains buried but accessible to Iranian authorities.

Defense officials are skeptical that the nuclear program can be fully dismantled without sending in a substantial U.S. ground force, an escalation that Trump has sought to avoid. But ending the war with Iran’s nuclear infrastructure partially intact could have devastating repercussions. The U.S.-Israeli campaign could force the new Iranian leader to conclude that regime survival requires a nuclear deterrent, one official said.

“Even if President Trump declares victory tomorrow, and points to the damage done to Iran’s conventional military, the fact of the matter is you have a more hardline regime in place with the key ingredients for a nuclear weapon,” said Eric Brewer, deputy vice president of the nuclear materials security program at the Nuclear Threat Initiative, who noted that Tehran still has a stockpile of 60% enriched uranium — close to weapons grade — and advanced centrifuges to take it over the finish line.

“What’s the plan for day after,” Brewer added, “as Iran starts to build back, and potentially seeks nuclear weapons?”

Patrick Clawson, director of the Iran program at the Washington Institute for Near East Policy, said that Mojtaba Khamenei’s position on the nuclear program has been a stubborn mystery. Reports spreading on social media that he opposed the Joint Comprehensive Plan of Action, a nuclear deal brokered among world powers and Iran during the Obama administration, are unsubstantiated, he said.

“While Mojtaba often advised his father on domestic issues, there is much less information about his position on foreign affairs, other than opposition to Israel,” Clawson said. “I have never seen any indications he took a position about the JCPOA.”

President Trump has outlined the destruction of Iran’s nuclear capabilities as a major goal. But in closed door briefings to Congress, defense officials have been less emphatic, according to Democratic lawmakers.

On Tuesday, shortly after Khamenei was named to succeed his father, Defense Secretary Pete Hegseth warned him to disavow continued nuclear work in an exchange with reporters.

“He would be wise to heed the words of our president, which is to not pursue nuclear weapons,” Hegseth said, “and come out and state as such.”

WASHINGTON — Iran’s new supreme leader, Mojtaba Khamenei, vowed retaliation Thursday against the United States and Israel and signaled that Tehran will continue to choke off the world’s most critical oil route, as the war strained global energy markets and raised new security concerns in the United States.

In his first public remarks since U.S.–Israeli strikes killed his father, former Supreme Leader Ayatollah Ali Khamenei, Mojtaba Khamenei swore revenge. The new leader, notably, did not appear in person for the televised statement. Instead, his written words were read aloud on Iranian state media.

“We will never retreat and vow to avenge the blood of our martyrs,” he said. “Our revenge will be never ending, not only for the late supreme leader, but also for the blood of all of our martyrs. … Those who killed our children will pay the price.”

The new leader expressed condolences to families who lost children in a strike on a girls school in Minab that killed more than 165 people, many of them children. He also warned that the war could expand, declaring that the continuation of the conflict “depends on the interests of the parties.”

The Associated Press, citing two sources, reported that outdated intelligence likely led to the United States carrying out the deadly missile strike on the elementary school. U.S. Central Command relied on target coordinates for the strike using outdated data provided by the Defense Intelligence Agency, according to a person familiar with the preliminary finding.

Khamenei indicated that Tehran would maintain its blockade in the Strait of Hormuz, a key choke point through which 20% of the world’s oil supply is shipped. He also said he believes in friendship with his country’s neighbors, but that attacks on U.S. military installations in the region will continue. He described maintaining pressure on the passage as a necessary part of Iran’s war strategy.

His remarks came as attacks continued to disrupt shipping and energy infrastructure across the Persian Gulf. The war sent oil up 10% Thursday as hostilities in Iran drag on.

Reports from the region said Iranian forces have intensified strikes on vessels attempting to pass through the Strait of Hormuz, leaving hundreds of ships stranded at its entrances and rattling global oil markets.

Two oil tankers were struck by explosives in Iraqi waters near the port of Basra. The Islamic Revolutionary Guard Corps claimed responsibility for the attacks, which killed at least one crew member and set both vessels ablaze, according to the Associated Press. A third unnamed vessel was reported to have been struck by an “unknown projectile” near Dubai and Jebel Ali, causing a small fire, the United Kingdom Maritime Trade Operations reported.

The latest incidents come after drone strikes targeted fuel storage facilities across the Gulf, including at energy sites in Bahrain and at the port of Salalah in Oman, an important hub for tankers seeking to bypass the Strait.

“They will pay the price. We will destroy their facilities,” Khamenei said. “It is necessary to continue our defensive activity, including continuing to close the Strait of Hormuz.”

New York City, United States – Rising prices on the back of US-Israel strikes on Iran are adding to the economic pressure facing US consumers despite efforts by US President Donald Trump to paint the war as a success.

On Wednesday, Trump declared, “We won – in the first hour it was over.”

Trump’s declaration comes even as the Strait of Hormuz remains closed, cutting off oil from the Gulf amid warnings from Iran, which continues to strike ships, that oil could reach $200 per barrel.

Oil prices spiked above $100 per barrel on Sunday and again today.

The magnitude of the economic pressure on consumers will depend on how long the war lasts and, crucially, how soon shipping traffic can return to the Gulf.

“If it drags on and especially if it remains at this intensity, prices will be higher, and more volatile for consumers,” said Rachel Ziemba, an adjunct senior fellow at the think tank Center for a New American Security.

“If it ends quickly, and it’s a credible and stable end, then we could see prices fairly quickly normalising”.

If the war lasts more than a few weeks, however, observers say the US economy is more likely to see deepening impacts, like 1970s-style “stagflation” or a recession.

When might we see a recession?

On Thursday, the International Energy Agency said in a report that “the war in the Middle East is creating the largest supply disruption in the history of the global oil market.”

According to Sam Ori, who directs the Energy Policy Institute at the University of Chicago, in the past, when oil prices have reached 4 percent to 5 percent of gross domestic product and stayed elevated, “that’s always triggered a recession.”

The US will not hit that threshold as quickly as it would have in the 1970s, when its economy was more deeply dependent on foreign oil, Ori said, but added he expected a recession if prices remained about $140 a barrel for most of the year.

Alternatively, “the indefinite closure of the Strait of Hormuz would so vastly exceed that number, it would not take a year,” he said.

Ori, who used to run an oil shock war game for US officials, said he would have been “laughed out of the room” if he had proposed a scenario where the strait was closed for six months, because many analysts see it as “too big to fail”.

Ori says that assessment is still likely, but recent developments “are chipping away at that level of certainty”.

The Gulf, which separates the Arabian Peninsula and Iran, provides more than one-fifth of the world’s oil supply via tanker ships through the Strait of Hormuz.

The severity of that threat to the global economy is the “strongest indicator that this is going to get resolved pretty fast, because it’s impossible to fathom what would happen if it didn’t”, Ori said.

He added that the conflict has now entered a phase in which it may be moving out of US control, especially as some countries have turned off the oil wells as they run out of storage.

While those events have now been baked into oil prices, the things that he is on the lookout for include “successful mining of the strait, some kind of structural blockage, or a battlespace development that binds the US into a longer, drawn out conflict”, outcomes that could signal a total loss of the strait for an unknown amount of time and create the “conditions for a complete meltdown”.

Higher prices

The war is already driving petrol prices up for US consumers.

Patrick DeHaan, who leads petroleum analysis for the app GasBuddy, said that the national average as of Wednesday is now $3.59 per gallon ($0.95 per litre) – up 65 cents since February.

The highest increases are near the coasts, where US petrol, diesel and jet fuel supplies are more easily diverted to meet global demand, according to DeHaan.

An end to the conflict could lower petrol prices within weeks, DeHaan said, but “every week that this goes on, we could see another 25 to 40 cent increase”.

Robert Rogowsky, an adjunct professor at Georgetown University’s School of Foreign Service, said lower-income people in particular, “will pay the price for this inflationary burst”.

As the war continues, it will also nudge up prices for consumer goods.

Peter Sand, chief analyst for freight intelligence platform Xeneta, said the backup at the Strait of Hormuz is already causing congestion at ports worldwide.

In the short term, consumers should not feel much of a pinch, Sand said. But if the conflict lasts for a month, some goods will be delayed, “and of course, the price tag on those goods also goes up.”

The war also means that the Red Sea, mostly closed in 2025 due to Houthi attacks, will likely stay closed throughout 2026, Sand said. It was expected to reopen, which could have lowered consumer prices.

Oil and oil byproducts from the Gulf are also used directly in consumer goods, like plastics, pharmaceuticals and fertilisers. Shortages now may mean higher prices later.

Fertilisers from the Gulf, for example, are needed soon for spring planting. Delays could affect crops next year.

A shortage of helium from the Gulf could also impact semiconductor manufacturing, delaying car manufacturing and other industries, Ziemba said.

The spectre of 1970’s-style ‘stagflation’

Higher consumer prices could increase the risk of “stagflation”, when stagnant economic growth occurs alongside high unemployment and high inflation.

That is how the US economy responded to the oil price shocks of the 1970s.

Severin Borenstein, faculty director of the Energy Institute at the University of California, Berkeley’s Haas School of Business, said, “There’s certainly concern about stagflation again.”

That combination of high inflation plus high unemployment, Borenstein said, “is just really tough for the Fed to deal with”.

“They can either juice the economy or slow it down, and the two problems call for opposite solutions”, Borenstein said.

The Fed can lower interest rates to prompt spending and hiring, which can make inflation worse, or it can raise interest rates to lower inflation, which can slow hiring.

Ziemba said higher oil prices likely point to “inflation remaining stickier, which means it’s harder for the Fed to cut interest rates.”

As a result, “mortgage rates and other long-term interest rates might be stuck at their current levels,” Ziemba said. Mortgage rates, which were at 5.99 percent on February 27, are up to 6.29 percent as of March 12.

Even if the war ends tomorrow, it may already be accelerating longer-term shifts.

Rogowsky called US attacks on Iran “an injection of adrenaline” into a realignment already under way, as middle powers seek to reduce their reliance on the US.

That realignment “will affect our terms of trade, which will have a distinct impact on our economy”, Rogowsky said.

Logistics consultant David Coffey said for some businesses, the war is expediting conversations about risk. “They may have been assuming ‘Yes, there’s risk in the Middle East,’ but they may not have been assuming that this would kick off”, Coffee said.

Making supply chains more secure could raise costs for consumers, he said.

Military spending and the US budget

Meanwhile, Heidi Peltier, a senior researcher at Brown University’s Costs of War Project, said war also means long-term expenses around debt payments and veterans’ healthcare.

“We have spent at least $1 trillion in interest on the Iraq and Afghanistan wars – and rising, because it’s not like we’ve paid off any of that principal”, Peltier said.

Military spending, she said, also tends to create fewer jobs than government investment in education or healthcare. “If we’re spending money on this, what are we not spending money on?” Peltier asked.

The price of oil has soared over $100 a barrel globally as a result of the US-Israeli war on Iran. Iran has effectively shut down shipping lanes in the Strait of Hormuz, while Israel has attacked critical Iranian oil depots. Despite public pressure and outrage, all parties seem prepared to continue the war. What will it mean for the global economy and the people caught in the crossfire?

Listen to more about the Strait of Hormuz here.

In this episode: 

• Zein Basravi (@virtualzein), Al Jazeera Senior Correspondent

Episode credits:

This episode was produced by Chloe K. Li, with Sarí el-Khalili, Catherine Nouhan, Tuleen Barakat, Spencer Cline and our host, Malika Bilal. It was edited by Alexandra Locke.

Our sound designer is Alex Roldan.  Our video editors are Hisham Abu Salah and Mohannad al-Melhem. Alexandra Locke is The Take’s executive producer.

Special thanks to Sheila H.

Connect with us:

@AJEPodcasts on X, Instagram, Facebook, and YouTube

The United States military is “not ready” to accompany oil ships through the Strait of Hormuz, a top official in President Donald Trump’s administration says as Iran continues to block the strategic waterway.

US Energy Secretary Chris Wright told the CNBC business news channel on Thursday that the markets are experiencing a “short-term disruption”, predicting that the war would go on for “weeks, not months”.

Despite Trump’s repeated threats, Iran has largely succeeded in shutting down the strait, which links the Gulf to the Indian Ocean. The closure has sent oil prices soaring.

Wright described the effects of the crisis as “short-term pain for long-term gain”, arguing that the US is “destroying” Iran’s ability to threaten the energy market.

Last week, Trump suggested that the US Navy would escort ships through the Gulf, but Wright said on Thursday that the move “can’t happen now”.

“We’re simply not ready. All of our military assets right now are focused on destroying Iran’s offensive capabilities and the manufacturing industry that supplies their offensive capabilities,” the energy secretary said.

“We don’t want this to be a brush-off for a year or two. We want to permanently destroy their ability to build missiles, to build roads, to have a nuclear programme.”

His comments came as Iran’s new supreme leader, Mojtaba Khamenei, affirmed in his first public comment since being selected to succeed his assassinated father, Ali Khamenei, that the Strait of Hormuz should remain closed during the war.

“The will of the people is to continue effective and deterrent defence,” Khamenei said in a written statement. “The tactic of closing the Strait of Hormuz must also continue to be used.”

The Iranian military has said it would “welcome” the US Navy escorting oil ships, suggesting it is prepared to strike US forces in the narrow waterway.

On Wednesday, three commercial vessels were attacked near the strait.

Wright announced earlier this week on social media that the US Navy had escorted an oil ship through the strait, then quickly deleted the post. The White House subsequently confirmed that the claim was not true.

It is not clear why the statement was released and then retracted.

Assurances by US officials that Washington would open the strait have temporarily calmed markets, only for prices to spike again.

The price of a barrel of oil peaked at about $120 on Sunday, up from about $70 before the US and Israel launched the war on February 28. It has been yo-yoing between $80 and $100 for the past few days.

In addition to the marine blockade, Iran has targeted oil installations across the Gulf.

As one of the world’s largest oil producers, the US is largely self-sufficient. But possible shortages in Asia and Europe have put a strain on prices globally.

According to data from the American Automobile Association, the average price of one gallon (3.78 litres) of petrol in the US is now $3.60, up from $2.94 last month.

Rising energy prices could fuel inflation and affect the cost of basic goods, including food.

But Trump suggested on Thursday that the US is benefitting from skyrocketing oil prices.

“The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money,” the US president wrote in a social media post.

“BUT, of far greater interest and importance to me, as President, is stopping an evil Empire, Iran, from having Nuclear Weapons, and destroying the Middle East and, indeed, the World.”

Iran denies seeking a nuclear weapon, and Trump reiterated for months before the current conflict that US strikes against Iranian facilities in June had “obliterated” the country’s nuclear programme.

Iranian President Masoud Pezeshkian has laid out terms for ending the war with the United States and Israel in what analysts say is a possible sign of de-escalation from Tehran as the US-Israel war on Iran entered its 13th day on Thursday.

In a post on Wednesday on social site X, Pezeshkian said he had spoken to his counterparts in Russia and Pakistan, and that he had confirmed “Iran’s commitment to peace”.

“The only way to end this war – ignited by the Zionist regime & US – is recognizing Iran’s legitimate rights, payment of reparations, and firm int’l guarantees against future aggression,” Pezeshkian wrote.

This is a rare posture from Tehran, which has maintained a defiant stance and initially rejected any possibility of negotiations or a ceasefire when war broke out nearly two weeks ago.

Pezeshkian’s statement comes as pressure mounts on the US to halt what has become a very costly mission. Analysts say speculation from Washington that Iran would quickly submit after the killing of Supreme Leader Ayatollah Ali Khamenei were misguided.

Tehran is likely going to determine the end of this war, not the US or Israel, because of its ability to inflict economic pain broadly, they say.

Amid a military pummelling by the US and Israel, Iran has launched heavy retaliatory strikes at US assets and other critical infrastructure in Gulf countries, upsetting global supplies. It has also adopted what analysts call “asymmetric” tactics – such as disrupting the critical Strait of Hormuz and threatening US banking-linked entities – to inflict as much economic pain on the region and wider world as it can.

This is what we know about Pezeshkian’s stance and what the pressures are on both sides to draw the conflict to a close, quickly.

What has the war cost so far?

Economically, both sides have weaponised energy. Israel first targeted Iran’s oil facilities in Tehran on March 8, prompting an outcry from global health experts over the potential risk of air and water pollution.

Iran has, meanwhile, tightened its chokehold on the Strait of Hormuz shipping route – the only route to open sea for oil producers in the Gulf – with its military promising on Wednesday that it has the capabilities to wage a long war that could “destroy” the world economy.

Attacks on ships in the strait, through which about 20 percent of global oil and gas traffic normally passes, have effectively closed the route.

Oil prices rocketed above $100 per barrel late last week, up from around $65 before the war, with ordinary buyers feeling the increases at pumps in the US, Europe and parts of Africa.

On Wednesday, Iran upped the ante, saying it would not allow “a litre of oil” to pass through the strait and warned the world to expect a $200-per-barrel price tag.

“We don’t know how quickly it’ll revert back,” Freya Beamish, chief economist at GlobalData TS Lombard, told Al Jazeera. “We do think it’ll revert back to $80 in due course, but the ball is to some degree in Iran’s court,” she said, adding that because Iran needs oil revenue, the price hikes are expected to be time-limited.

The International Energy Agency agreed on Wednesday to release 400 million barrels from the emergency reserves of several member states but it is not yet clear what impact that will have, nor how quickly this quantity of oil can be released.

Tehran has also been accused of directly attacking oil facilities in neighbouring countries this week. Iraq shut all its oil port operations on Thursday after explosive-laden Iranian “drone” boats appeared to have attacked two fuel tankers in Iraqi waters, setting them ablaze and killing one crew member.

A drone was filmed striking Oman’s Salalah oil port on Wednesday, although Tehran has denied involvement.

What are Iranian officials saying about ending the war?

There has been conflicting messaging from the Iranian leadership.

Iran’s elite army unit and parallel armed force, the Islamic Revolutionary Guard Corps (IRGC), continues to show defiance, issuing threats and launching attacks on Israel and US military assets and infrastructure in neighbouring Gulf countries.

However, the political leadership has appeared more inclined towards diplomacy, analysts say. On Wednesday, President Pezeshkian said that ending the war would take the US and Israel recognising Iran’s rights, paying Iran reparations – although it’s unclear how much is being asked for – and providing strong guarantees that a future war will not be waged.

In a video recording last week, he also apologised to neighbouring countries for the strikes and promised that Iran would stop hitting its neighbours as long as they do not allow the US to launch attacks from their territory.

“I personally apologise to the neighbouring countries that were affected by Iran’s actions,” the president said, adding that Tehran was not looking for confrontations with its neighbours.

However, it is not known how much sway the political leadership has over the IRGC. Hours after the president’s apology last week, air defence sirens went off in Saudi Arabia, Qatar, the UAE and Bahrain, as strikes continued on the Gulf.

So, what is Iran’s actual position?

“Iran wants to go to the end to make sure that the United States and Israel never attack Iran again … so this has to be the final battle,” Al Jazeera’s Resul Serdar Atas explained.

Indeed, the IRGC sees this as an existential war, but the timing of Pezeshkian’s statement about ending the conflict also shows Tehran is pressured economically, politically and militarily, Zeidon Alkinani of Qatar’s Georgetown University told Al Jazeera.

“These differences and divisions [between IRGC and political leaders] always existed even prior to this war but we may notice it now more, given the fact that the IRGC believes that it has the right to take the front seat in leading this regional war, which is why a lot of the statements and positions are contradicting with the official ones from Pezeshkian,” he said.

The IRGC reports directly to Iran’s Supreme National Security Council (SNSC) and not to the country’s political leadership. That council is led by Ali Larijani, a top politician and close aide to the late supreme leader, Ali Khamenei, who analysts describe as a “hardliner”.

In a post on X on Tuesday, Larijani responded to threats from Trump about attacks on the Strait of Hormuz, saying: “Iranian people do not fear your hollow threats; for those greater than you have failed to erase it … So beware lest you be the ones to vanish.”

The newly elected supreme leader, Mojtaba Khamenei, was once in the IRGC and was put forward by the unit as the next ayatollah after his father was killed on the first day of the war, analysts say. He is thus not expected to follow the reformist, diplomatic ideals of President Pezeshkian and other political leaders which his father managed to marry with the IRGC militarised stance, they say.

What do the US and Israel say about ending the war?

There have also been conflicting messages from the Trump administration and Israel regarding when the war mission on Iran, codenamed Operation Epic Fury, is likely to end.

Trump told US publication Axios on Wednesday that the war on Iran would end “soon” because there’s “practically nothing left to target”.

“Anytime I want it to end, it will end,” he added. He had said earlier on Monday that “we’re way ahead of our schedule” and that the US had achieved its goals, even as speculation mounts about a possible US ground mission.

On the other hand, Israel’s Defence Minister Israel Katz said on Wednesday that the war would go on “without any time limit, for as long as necessary, until we achieve all the objectives and decisively win the campaign”.

Analysts say Trump’s stance that the conflict will be quick reflects increasing pressure on his administration ahead of upcoming mid-term elections in November.

Trump’s advisers privately told him this week to find a quick end to the war and avoid political backlash, according to reporting by The Wall Street Journal. That came as polls from Quinnipiac University and The Washington Post suggested that most Americans are opposed to the war in Iran.

In his 2024 presidential campaign, Trump promised to lower prices, and inflation had stabilised at 2.4 percent ahead of the war, according to government data released on Wednesday. Analysts speculate the conflict will likely push it back up.

The US spent more than $11.3bn in the first six days of the war, Pentagon officials told lawmakers in a classified briefing on Tuesday, Reuters reported this week – nearly $2bn a day.

The Washington-based think tank, Center for Strategic and International Studies (CSIS), estimated that the war cost Washington $3.7bn in its first 100 hours alone, or nearly $900m a day, largely due to its expenditure on costly munitions.

“It’s quite ironic that [Trump] chose a war that would make affordability worse, not better,” Rebecca Christie, a senior fellow at the Bruegel think tank, told Al Jazeera’s Counting the Cost.

“Every time the US loses even one object, air defence or a plane or something like that, that represents an awful lot of money that could have been used on some of these issues that have an impact on people’s day-to-day lives in the United States.”

Multiple explosions have been reported across Iran’s capital, Tehran, and other cities as United States-Israeli attacks and Iranian retaliation continue.

As the conflict saw its 13th day on Thursday, Iran’s representative to the United Nations, Amir Saeid Iravani, said at least 1,348 civilians have been killed.

The humanitarian toll continues to mount with more than 17,000 injured in Iran since the US and Israel launched their war on February 28. UNICEF described the situation as “catastrophic”, noting that more than 1,100 children have been reported injured or killed.

The Office of the UN High Commissioner for Refugees (UNHCR) estimated that up to 3.2 million people have been displaced within Iran since the conflict began. “This figure is likely to continue rising as hostilities persist, marking a worrying escalation in humanitarian needs,” UNHCR said in a statement.

Meanwhile, in Lebanon, Israeli attacks since March 2 have killed at least 687 people, including 98 children, according to Information Minister Paul Morcos.

United Nations refugee agency says forced displacement likely to increase as US and Israel continue deadly strikes across Iran.

More than three million people have been displaced in Iran since the United States and Israel launched a war against the country late last month, the United Nations says, as concerns mount over a worsening humanitarian crisis.

The UN High Commissioner for Refugees (UNHCR) said on Thursday that as many as 3.2 million people – representing between 600,000 and one million Iranian households – have been forcibly displaced since the war began on February 28.

“Most of them are reportedly fleeing from Tehran and other major urban areas towards the north of the country and rural areas to seek safety,” UNHCR official Ayaki Ito said in a statement.

“This figure is likely to continue rising as hostilities persist, marking a worrying escalation in humanitarian needs.”

The US and Israeli militaries have continued to bombard Iran despite mounting international condemnation and calls for de-escalation.

More than 1,300 people have been killed in US-Israeli attacks across the country to date, according to the latest figures from Iranian officials.

While the US and Israel have said they are targeting Iranian leaders as well as military and nuclear infrastructure, Iran says thousands of civilian sites, such as schools and hospitals, have been attacked.

Iran’s Deputy Health Minister Ali Jafarian told Al Jazeera on Thursday that medical teams have been responding to a growing number of casualties as strikes on urban areas have intensified in recent days.

“Most of these people are civilians,” Jafarian said, adding that more than 30 hospitals and health facilities have been damaged due to the attacks.

On Thursday, explosions were heard in several parts of the capital, Tehran, and other Iranian cities as the strikes continued.

Al Jazeera’s Tohid Asadi said rescuers were digging through mounds of rubble as several multistorey apartment buildings were heavily damaged in recent attacks on a hard-hit eastern neighbourhood of Tehran.

“We saw bodies taken out [of the rubble] … and the situation was far beyond what I can call disastrous,” Asadi said.

Iran has responded to the US-Israeli assault by launching a barrage of missiles and drones at US bases and other sites in countries across the wider Middle East region.

It has also shut down the Strait of Hormuz, a critical Gulf waterway through which about one-fifth of the world’s oil transits, raising serious concerns of disruptions to global energy supplies.

Despite United States President Donald Trump’s repeated declarations of victory in the US-Israeli war on Iran, Tehran’s retaliatory strikes on Israel and US military assets in the region have continued, upending global financial and energy markets.

“We’ve had two decades to study defeats of the US military to our immediate east and west. We’ve incorporated lessons accordingly,” Iranian Foreign Minister Seyed Abbas Araghchi wrote in a post on X on March 1, the day after US and Israeli strikes on Tehran killed Iran’s Supreme Leader Ayatollah Ali Khamenei and other senior Iranian officials.

“Bombings in our capital have no impact on our ability to conduct war,” he wrote.

According to analysts, Iran has made use of “asymmetric” warfare tactics while striking the US and Israel. So, are Tehran’s war tactics working?

Here’s what we know:

What is ‘asymmetric’ warfare?

When the balance of capabilities is unequal in a conflict – as it is in relation to weapons in this one – the weaker party can turn to unconventional methods of warfare, John Phillips, a British safety, security and risk adviser and a former military chief instructor, told Al Jazeera.

This is known as “asymmetric” warfare.

This can include the use of guerrilla tactics, terrorism, cyberattacks, use of proxies and other indirect tools, Phillips said, in order “to offset conventional inferiority, avoid the enemy’s strengths, and exploit vulnerabilities in political will, logistics, and legal or ethical constraints”.

“Iran is conventionally weaker than the US and Israel, but relatively strong compared to many neighbours,” he said.

“What makes Iran distinctive is not that it uses these methods at all, but that they sit at the centre of its grand strategy rather than at its margins.”

Why is Iran using asymmetric warfare?

In the ongoing war between Iran and the US-Israel, Washington and Tel Aviv have been using expensive missiles and drones to attack Iran and to intercept missiles Iran has fired back. The Patriot and THAAD defence systems, for example, which launch interceptors to take out incoming drones and missiles, can cost millions of dollars for each missile they fire. This compares with the $20,000-$35,000 cost of each Iranian Shahed drone.

As a result, the US has reportedly spent $2bn a day in its war on Iran and there are fears it could run out of interceptor missiles altogether if the war goes on for more than a few weeks.

It is therefore in Iran’s interests to focus on holding out against strikes and protecting its own weapons supplies while it does so, military experts say.

However, Phillips explained that precision strikes and sabotage by Israel and the US have demonstrated that Iran is not able to fully shield its missile, drone and nuclear‑related assets, while sanctions and domestic pressures have limited its capacity to sustain a very high‑tempo confrontation.

“As a result, Iran’s asymmetric approach is best understood as an effective ‘survival and leverage’ mechanism that produces a chronic, costly ‘shadow war’, rather than a path to decisive regional hegemony or victory,” he said.

Iran began using asymmetric warfare techniques following the 1979 Iranian revolution, which overthrew Shah Mohammad Reza Pahlavi.

“Instead of trying to match high‑end aircraft, precision munitions, or blue‑water fleets, [Iran] has built a ‘forward deterrence’ posture that operates in the grey zone between war and peace,” Phillips said.

“This is backed by large inventories of ballistic and cruise missiles, mass‑produced drones [often handed to proxies], cyber-operations, and a posture of underground, dispersed and hardened facilities that make preemption difficult and preserve some retaliatory capability.”

What asymmetric tactics has Iran been using?

Enemy depletion tactics

Since US-Israeli strikes on Iran began on February 28, Tehran has launched a wave of ballistic missiles targeting Israel and US military bases across the Gulf region.

Using a mix of short and medium-range ballistic missiles, as well as drone swarms through this defence system, Iran aims to deplete Israeli and US interceptor stockpiles.

Economic warfare

Iran has shut down the Strait of Hormuz through which about 20 percent of global oil and gas supplies are shipped. Linking the Gulf to the Gulf of Oman, the strait is the only waterway to the open ocean available to Gulf oil producers.

On Thursday, Iran attacked fuel tankers in Iraqi waters. Instability in and around the Strait of Hormuz drove Brent crude oil prices past $100 a barrel last week, with wild swings ongoing, prompting fears of a global energy crisis.

Iran has also targeted civilian infrastructure like airports and desalination plants which are crucial for water supply in the region, and it has launched drones targeting oil depots.

War on global finance

Meanwhile, on Wednesday this week, Iran’s Islamic Revolutionary Guard Corps (IRGC) threatened to attack “economic centres and banks” with links to United States and Israeli entities in the Gulf region after what it claimed was an attack on an Iranian bank, with the war in its 12th day.

Since then, many banks like Citibank and HSBC in Qatar, have begun shutting, further threatening global financial stability.

Top technology companies such as Google, Microsoft, Palantir, IBM, Nvidia and Oracle, as well as the listed offices and infrastructure for cloud-based services, are also located in several Israeli cities and in some Gulf countries, which Iran has also threatened to attack.

Use of proxies

Iran has aimed to keep the much more powerful US military and its allies off balance through proxies in Iraq, Lebanon and Yemen. Hezbollah in Lebanon, for example, has fired missiles and drones into northern Israel since March 2 as part of Iran’s retaliatory strikes.

“At the core of this [asymmetric] approach is a network of proxies and partners – Hezbollah in Lebanon, Shia militias in Iraq, groups in Syria, Hamas and Palestinian Islamic Jihad in Gaza and the Houthis in Yemen – which receive weapons, training, funding and ideological guidance from Iran,” Phillips said.

These actors allow Tehran to threaten Israeli and US forces, as well as regional shipping lanes, on multiple fronts, “often with a degree of deniability and at a fraction of the cost of deploying its own regular forces”, Phillips noted.

‘Mosaic’ defence system

Iran has organised its defensive structure into multiple regional and semi-independent layers instead of concentrating power in a single command chain that could be paralysed by a decapitation strike. This concept is most closely associated with the formation of the parallel military force, the Islamic Revolutionary Guard Corps (IRGC), particularly under former commander Mohammad Ali Jafari, who led the force from 2007 to 2019.

The doctrine has two central aims: to make Iran’s command system difficult to dismantle by force, and to make the battlefield itself harder to resolve quickly by turning Iran into a layered arena of regular defence, irregular warfare, local mobilisation and long-term attrition.

What damage have these tactics done to the US and Israel?

Iran’s asymmetrical playbook has made the war more expensive for the US. It has been forced to spend money on replacing stockpiles of expensive missiles like Tomahawks and defensive systems such as Patriot and THAAD interceptors.

According to the Center for Strategic and International Studies (CSIS), the first 100 hours alone of Operation Epic Fury – the codename for the US-Israeli assault on Iran – cost the US approximately $3.7bn, mostly unbudgeted. Israel, already reeling from the economic strain of its prolonged wars in Gaza and Lebanon, faces mounting domestic pressure as daily sirens force millions into bunkers.

While the Pentagon has not yet announced an official estimate for the cost of the war, late last week, two congressional sources told US broadcaster MS NOW that the war is costing the United States an estimated $1bn a day.

A day later, Politico reported that US Republicans on Capitol Hill privately fear the Pentagon is spending close to $2bn a day on the war.

Meanwhile, officials from President Donald Trump’s administration estimated during a congressional briefing this week that the first six days of the war on Iran had cost the US at least $11.3bn, a source familiar with the matter told the Reuters news agency.

Reporting from Washington, DC, following the publication of the CSIS analysis last week, Al Jazeera’s Rosiland Jordan said the Pentagon had put together a $50bn supplemental budget request in order to replace Tomahawk and Patriot missiles and THAAD interceptors already used in the first week of the war, along with other equipment that had been damaged or worn out so far.

Are Iran’s tactics working?

To a certain extent, they are.

According to a report by The Soufan Center, the “pattern of Iranian counterattacks suggests a layered operational approach designed to generate pressure on Gulf states, create regional disruption on land, sea, and air, while simultaneously attempting to exhaust US and allied defensive resources”.

“Tehran appears to be fighting a war of endurance: prolong the conflict, expand the economic battlefield, make the costs increasingly prohibitive, ration advanced capabilities, and impose steady human and financial costs on its adversaries. All with the hope that political tolerance erodes faster in Jerusalem and Washington than in Tehran,” the report noted.

This may be working. Questions about the cost of the war are already causing a political headache for the Trump administration in Washington.

Congress’s House Minority Leader Hakeem Jeffries told reporters at a Capitol Hill news conference last week that President Donald Trump is “plunging America into another endless conflict in the Middle East” and “spending billions of dollars to bomb Iran”.

“But they can’t find a dime to make it more affordable for the American people to go see a doctor when they need one,” he said. “Can’t find a dime to make it easier for Americans who are working hard to purchase their first home. And they can’t find a dime to lower the grocery bills of the American people.”

Trump won the presidency in 2024 largely on the back of a promise to handle the rising cost of living and he faces mid-term elections this year. It is likely that the cost of the war will not play well with voters, analysts say.

In Israel, opposition politician Yair Golan has also criticised his government’s economic management of the war.

In a post on X on Sunday, he wrote: “The war with Iran has been planned for months. The fact that the Israeli government has not prepared an orderly economic plan to support citizens during the war period is a disgrace.

“The serving and working public should not be the one footing the bill for the war out of its own pocket while billions of shekels go to the evading and non-working sector,” he said, adding that the opposition will soon replace the government.

Ali Vaez, director of the Iran Project at the International Crisis Group, told Al Jazeera that at a fraction of the cost – and despite a significant technological gap – Iran has demonstrated an ability to hold the global economy at risk, to pressure Washington into “blinking first”.

“A steady stream of inexpensive drones and limited missile strikes can disrupt the thriving economies of Israel and the Gulf, sending shockwaves through energy markets and ultimately translating into higher prices at American gas stations,” he said.

Phillips, the British safety, security and risk adviser, said the strategy has worked in important but limited ways.

“It has helped the Islamic republic survive intense sanctions, clandestine campaigns and periodic strikes while maintaining a credible ability to hit US bases, Israeli territory and Gulf infrastructure, which in turn raises the political and military cost of any attempt at regime-change war,” he said.

“Iran’s reach – stretching from Lebanon and Syria to Iraq and Yemen – allows it to shape crises, quickly raise the stakes of local conflicts, and force adversaries to devote substantial resources to missile defence, counter‑UAV systems, naval protection and regional coalition management,” he noted.

“However, there are clear constraints and growing problems. Key proxies such as Hezbollah and various militias have suffered leadership and infrastructure losses; the network has become more fragmented and sometimes less controllable, increasing the risk of unwanted escalation even as its coherence as an instrument of policy erodes,” he added.

Al Jazeera’s Tohid Asadi shows the aftermath of US-Israeli airstrikes on a residential neighbourhood in Iran, where rescue teams have been searching for survivors among the rubble.

President Trump was uncommonly lucky in his first term, neither inheriting nor provoking a crisis of the sort that tests U.S. presidents, until COVID struck in his final 10 months. (He failed that test, contributing to his 2020 reelection defeat.) Trump 1.0 was bequeathed a growing economy from President Obama, and the incoming president assembled a roster of capable advisors who often acted to prevent him from doing nutty things at home and abroad.

Trump 2.0 made sure that no such human guardrails populated his second Cabinet, only genuflecting enablers. Unrestrained, he has presided over one crisis on top of another, all of his own making. Tariff mayhem and high prices. Armed agents and troops in American cities. Repeated violations of court orders. Demolition at federal agencies and the White House.

And now Trump has taken the nation to war against Iran in league with Israel’s Benjamin Netanyahu. Depending on the moment and the audience, a contradictory Trump is either claiming the war is “very complete” or that much remains to be done to “decimate” Iran. On Wednesday he blithely told Axios, “Any time I want it to end, it will end,” even as U.S. officials planned further actions.

In any case, Trump’s war of choice and the killing of the supreme leader of Iran’s terroristic theocracy now has spawned another potential crisis, counterterrorism experts warn: the risks of retaliatory terrorist threats at home. And that is a threat, whether from homegrown extremists or sleeper cells of the sort that came alive for 9/11, that is likely greater because of the initial self-induced crisis of Trump’s second term: his whacking of the federal government.

Trump authorized Elon Musk’s destruction of the bureaucracy in the name of “government efficiency” and continues to exact retribution against any federal employee who had anything to do with investigating and prosecuting him during his interregnum. Longtime agents and operatives have been eliminated at the FBI, Justice Department, Department of Homeland Security, CIA and elsewhere. Especially at the FBI, counterterrorism experts with centuries of collective experience are gone and many who remain have been diverted to Trump’s top priority: mass deportations.

Consequently, the president who promised to “Make America Safe Again” has arguably made Americans less safe.

I raised this scary prospect just over a year ago as Trump’s teardown of the purported Deep State was underway. And now a Mideast war that Trump promised never to start has further incentivized Iran and its jihadi proxies to hit back, just as he’s diminished the nation’s early-warning systems.

Enough intelligence remains, however, that even in the days before Trump ordered the first strikes against Tehran, government analysts were picking up “worrisome signs” of Iranian plotting against U.S. targets, the New York Times reported. After the U.S.-Israel onslaught and death of Ayatollah Ali Khamenei on Feb. 28, the government intercepted a possible Iranian “operational trigger” to “sleeper assets” outside Iran, according to ABC News.

Counterterrorism expert Colin P. Clarke, executive director of the Soufan Center, which focuses on global security and transnational terrorism, wrote this week in the Atlantic that U.S. agencies’ record of disrupting Iranian-backed plots in America was in jeopardy given the recent changes in funding, personnel and priorities. “Because of this,” he concluded, “the U.S. homeland is arguably more vulnerable than it has been in a long time.”

In a follow-up exchange of emails, Clarke told me, “Many of this administration’s moves have been myopic — shifting counterterrorism resources to immigration, firing FBI agents working counterintelligence, etc. A week before the U.S. went to war with Iran, the FBI Director Kash Patel was off gallivanting in Milan at the Olympics [where he struggled to chug a Michelob Ultra, a firing offense in its own right] when he should have been preparing for the potential for an Iranian response on U.S. soil.”

Patel’s preposterous partying with the U.S. men’s hockey team while war-planning was underway in Washington was widely, justifiably mocked. But it stands as a metaphor for the entire Trump administration’s cavalier attitude toward homeland security. Its abusive focus on both migrants and citizens protesting on the migrants’ behalf is a distraction from actual threats to the country.

Patel, like his boss at the Justice Department, Atty. Gen. Pam Bondi, has made plain in words and actions that the president’s political enemies are the real public enemies No. 1. One of Bondi’s first acts was creation of a “weaponization working group” to identify, fire or prosecute those in her department who’d investigated and prosecuted Trump, many of whom also had experience in domestic and transnational terrorism. The association representing FBI agents called her purges “dangerous distractions” from the work “to make America safe again.”

Days after starting the Iran war, when homeland security should have been on red alert, Trump fired his secretary of Homeland Security, Kristi Noem. Her costly cosplaying as the homeland’s heroine on horseback in anti-migrant videos, along with her penchant for luxury jets allegedly to transport deportees, was too much even for him.

Yet all three “national security” officials — Noem, Bondi and Patel — simply reflect Trump’s own warped approach and blasé attitude toward the homefront.

When Time magazine last week asked the commander in chief whether Americans should be worried about potential terrorist strikes at home, he replied, “I guess.”

“We plan for it,” he added. “But yeah, you know, we expect some things. Like I said, some people will die. When you go to war, some people will die.”

The administration is planning for it all right. An extraordinary number of senior Trump officials have taken up residence in houses on military bases, including Bondi, Noem, the secretaries of State and Defense, Marco Rubio and Pete Hegseth, and White House consigliere Stephen Miller.

The rest of us just have to keep our fingers crossed. I guess.

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The surge in oil prices triggered by the war in Iran is increasingly becoming a major concern for global central banks, which are closely monitoring the potential economic and financial consequences of the shock.

More than a week of conflict in the Middle East has disrupted energy supply routes and pushed crude prices sharply higher, raising fresh fears about inflation. For policymakers already grappling with fragile economic conditions, the oil spike presents a complex policy dilemma.

Historically, oil shocks have posed a difficult challenge for central banks. Rising energy prices can drive inflation higher while simultaneously weakening consumer spending and business activity by raising costs. In such circumstances, policymakers face an uncomfortable choice: tighten policy to control inflation or ease financial conditions to support economic growth and employment.

The current situation could potentially produce both outcomes at once, creating a scenario where inflation rises even as economic demand weakens a combination that complicates monetary policy decisions.

Inflation Versus Economic Growth

Central banks traditionally respond to inflationary pressures by raising interest rates or maintaining tighter monetary policy. Some policymakers argue that responding quickly to inflation triggered by an oil shock can prevent inflation expectations from becoming entrenched and reduce longer-term economic damage.

Others, however, advocate “looking through” temporary energy-driven price spikes, arguing that aggressive tightening could unnecessarily damage economic growth. This approach gained prominence after the pandemic, when many central banks initially viewed inflation as temporary a judgment widely criticised in hindsight.

The decision facing policymakers now depends on several uncertainties, including how long the conflict lasts, how severely energy supplies are disrupted, and whether governments intervene with subsidies or price caps to protect consumers.

Given these unknowns, many central banks may prefer to adopt a cautious approach, waiting to see how markets and economic conditions evolve before making significant policy adjustments.

Financial Stability Risks Enter the Picture

Beyond inflation and growth concerns, central banks must also consider a third responsibility that has gained prominence since the global financial crisis: financial stability.

Senior policymakers worry that the oil shock could expose vulnerabilities that have been building in global financial markets for years. A large macroeconomic disturbance involving energy prices, inflation, interest rates and currency volatility could trigger a broader financial stress event.

Much of the concern centres on the growing role of “shadow banking” institutions, financial intermediaries operating outside traditional banking regulation. These entities have become increasingly important providers of credit to companies and governments.

One major area of focus is the rapid expansion of private credit funds, which now manage more than $3 trillion globally. These funds allow asset managers to lend directly to businesses, often outside the scrutiny of public markets or traditional banking standards.

Regulators worry that during a major shock, investors could rapidly withdraw funds from these vehicles, potentially creating liquidity problems for borrowers and spillover risks for banks that help finance or manage the funds.

Pressure in Bond and Repo Markets

Another major source of concern lies in government bond markets, where highly leveraged hedge funds have become increasingly active. Many of these funds use repurchase agreements, or “repo” markets, to borrow money and finance large trades involving government bonds.

These strategies often rely on exploiting small price differences between cash bonds and futures contracts, but they involve substantial leverage. While such activity can help smooth government financing, it can also create systemic vulnerabilities during periods of market stress.

The Financial Stability Board, which monitors risks to the global financial system for the G20, warned earlier this year that sudden deleveraging in repo markets could disrupt sovereign bond markets.

More than $16 trillion in repo transactions backed by government bonds were outstanding last year, with about 60% concentrated in the United States. A sudden withdrawal of leveraged investors could therefore have significant ripple effects across global financial markets.

New Fragilities: Stablecoins and Technology Stocks

Regulators are also monitoring emerging risks linked to digital finance. Stablecoins cryptocurrencies pegged to traditional currencies such as the U.S. dollar have grown rapidly and are increasingly investing reserves in government bonds.

With the stablecoin market now worth roughly $300 billion and expanding, any loss of confidence in these assets could trigger large-scale sales of the bonds that back them. Such an event could add stress to already volatile financial markets.

At the same time, some investors remain concerned about high valuations and heavy market concentration in the rapidly growing artificial intelligence sector, which could amplify market volatility during periods of economic uncertainty.

Analysis: Oil Shock Could Trigger Wider Financial Stress

The Iran war oil shock illustrates how geopolitical crises can interact with financial vulnerabilities to create broader economic risks.

Higher energy prices directly increase inflation and strain household finances. At the same time, they can force central banks to reconsider interest-rate policies, potentially leading to higher borrowing costs and greater volatility in financial markets.

Such conditions could expose weaknesses in highly leveraged sectors of the financial system, particularly in shadow banking, hedge funds and digital financial markets.

Although previous shocks including the economic turmoil following Russia’s invasion of Ukraine did not ultimately trigger a major financial crisis, policymakers remain cautious. The brief turmoil in the U.S. regional banking sector in 2023 demonstrated how quickly financial stress can emerge when economic conditions shift.

If oil prices remain elevated and central banks are forced to respond aggressively, the resulting tightening of financial conditions could amplify existing vulnerabilities across markets.

For now, the disturbances appear manageable. But the combination of geopolitical conflict, energy market disruption and financial fragility ensures that central banks will continue to watch the situation with increasing concern.

With information from Reuters.

One the UK’s biggest tour operators has suspended its profit guidance after revealing impact of Middle East war on bookings

Spooked Brits are putting their holiday plans on hold because of the Middle East crisis.

Leading holiday firm On the Beach revealed a “significant” drop in demand from British families to Turkey, Greece, Cyprus, and Egypt. “The timing of when the conflict will end and the shape of recovery in demand to these destinations are unknown,” it said.

At the same time, there are are warnings that the cost of a summer getaways could jump after a spike in jet fuel prices. It comes as many UK families would be booking sunshine trips for the Easter holidays.

The scale of the hit to bookings was enough for On the Beach to suspend its full year profit guidance. Boss Shaun Morton said: “Following the onset of the conflict in the Middle East, our operational teams have been working round the clock to support directly impacted customers in resort and to enable a return home as soon as possible.”

READ MORE: Saudi oil giant warns of ‘catastrophic consequences’ to global fuel suppliesREAD MORE: Mortgage rates hit 5% and deals slump after latest Iran war fall-out

The fall-out from the Iran war has already seen fuel prices jump and the cost of fixed rate mortgages rise. Industry experts Moneyfacts said the average two-year fixed rate mortgage had risen again, from 5.01% 5.04%. The average five-year fixed deal went up from 5.09% to 5.13%.

It came as oil prices remained at around $100 on Thursday – as two tankers were ablaze in Iraqi waters after what appeared to be Iranian strikes.

The latest wave of attacks on oil and transport facilities across the Middle East came as Iran warned the world should be ready for oil to hit $200 a barrel.

The conflict has spread across the region and prompted the International Energy Agency to recommended releasing 400 million barrels from reserves to dampen one of the worst oil shocks since the 1970s, the biggest such intervention in history.

Iran has made clear it intends to impose a prolonged economic shock.

Oil prices, which shot up earlier in the week to nearly $120 a barrel before retreating, jumped almost 10% back above $100 amid renewed fears about supply disruption.

Iranian explosive-laden boats appear to have attacked two fuel tankers in Iraqi waters setting them ablaze and killing one crew member.

Chris Beauchamp, chief market analyst at IG, said: “Overnight attacks on shipping off Iran are the stuff of nightmares for investors, confirming that one of the world’s key waterways is closed to shipping and resulting in a fresh surge in oil prices.”

US President Donald Trump claimed the IEA decision “will substantially reduce oil prices as we end this threat to America and the world.”

So far there has been no sign that ships can safely sail through the Strait of Hormuz, the now-blockaded channel along the Iranian coast that serves as a conduit for around a fifth of the world’s oil.

An Iranian military spokesperson said the Strait was “undoubtedly” under Iran’s control.

Lawmakers express concerns as Trump officials project $50bn more may be needed for Iran war funding.

Officials from President Donald Trump’s administration have estimated during a congressional briefing this week that the first six days of the war on Iran had cost the United States at least $11.3bn, a source familiar with the matter told the Reuters news agency.

That figure, from a closed-door briefing for senators on Tuesday, did not include the entire cost of the war, but was provided to lawmakers as they have clamoured for more information about the cost.

Several congressional aides have said they expect the White House to soon submit a request to Congress for additional funding for the war. Some officials have said the request could be for $50bn, while others have said that estimate seems low.

The administration has not provided a public assessment of the cost of the conflict or a clear idea of its expected duration. Trump said during a trip to Kentucky on Wednesday that “we won” the war but that the US would stay in the fight to finish the job.

The $11.3bn figure was first reported on Wednesday by The New York Times.

The human cost

The US-Israeli war on Iran has so far killed about 2,000 people, mostly Iranians and Lebanese, as the conflict has spread across the Middle East, with Iranian retaliatory strikes on neighbouring countries hosting US assets, sending energy prices soaring.

The United Nations children’s agency (UNICEF) says the “intensifying conflict” has killed or wounded 1,100 children, creating a “catastrophic” situation for millions of children across the Middle East.

About 800,000 people have already been displaced in Lebanon by relentless Israeli bombardment.

Administration officials also have told lawmakers that $5.6bn of munitions were used during the first two days of strikes.

Members of Congress, who may soon have to approve additional funding for the war, have expressed concern that the conflict will deplete US military stocks at a time when the defence industry was already struggling to keep up with demand.

Democratic lawmakers have demanded public testimony under oath from administration officials about the Republican president’s plans for the war, including how long it might last and what his plans are for Iran once the fighting has stopped.

Trump on Wednesday said the war with Iran may end “soon” because there is “practically nothing left” for the US military to bomb. He did not provide any evidence for that claim.

Israeli journalist and writer, Gideon Levy, says that regime change in Iran is unlikely and the decision to end the war ultimately rests with US President Trump, not Israel.

Iranian explosive-laden boats appear to have attacked two fuel tankers in Iraqi waters, setting them ablaze and killing one crew member, after projectiles struck three vessels in Gulf waters, according to reports.

The ships targeted in late-night ⁠attacks on Wednesday in the Gulf near Iraq were the Marshall Islands-flagged Safesea Vishnu and the Zefyros, which had loaded fuel cargoes in Iraq, two Iraqi port officials told the Reuters news agency.

“We recovered the body of a foreign crew member from the water,” one port security official said, as Iraqi rescue teams continued searching for other missing seafarers. It was not immediately clear which ship that person was linked to.

One Iraqi port security source said Zefyros is flagged ‌in Malta and provided Reuters with a list of crew names.

Al Jazeera’s correspondent in Baghdad, Iraq, Mahmoud Abdelwahed, said the tankers were loaded with crude oil from the Umm Qasr port in southern Iraq in the Basra province, and were attacked soon after their voyage got under way.

“Iraqi officials say this is a flagrant violation of Iraq’s sovereignty given the fact this act, they say, of sabotage has happened in Iraq’s territorial waters,” Abdelwahed said.

Reuters said that reports of the use of explosive-laden unmanned surface vessels, which Ukraine has used with great effect in its war with Russia, come as Iran has blocked oil shipments from transiting the key Strait of Hormuz, through which one-fifth of ⁠the world’s oil transits but has been blocked amid the United States-Israeli war on Iran.

Reuters, citing two unnamed sources, also reported on Wednesday that Iran ‌has deployed about a dozen mines in the strait, while US President Donald Trump said US forces had struck 28 Iranian mine-laying vessels, amid warnings by Trump of severe repercussions should Iran lay mines in the key waterway for global shipping.

Strait of Hormuz sealed

Iran’s Islamic Revolutionary Guard Corps (IRGC) have warned that any ship passing through the Strait of Hormuz will be targeted.

The Thai-flagged Mayuree Naree dry bulk vessel was struck by “two projectiles of unknown origin” while sailing through the strait earlier on Wednesday, causing a fire and damaging the engine room, the ship’s Thai-listed operator Precious Shipping said in a statement.

“Three crew members are ⁠reported missing and believed to be trapped in the engine room,” Precious Shipping said.

“The company is working with the relevant authorities to rescue these three ⁠missing crew members,” it said, adding that the remaining 20 crew members had been safely evacuated and were ashore in Oman.

Images shared by Thai news outlet Khaosod English showed what were reported to be crew members of the ship after their rescue by Oman’s navy.

The IRGC said in a statement carried by the semi-official Tasnim news agency that the ship was “fired upon by Iranian fighters”, suggesting the first direct engagement by the IRGC, who have previously fired missiles or drones.

The Japan-flagged container ship ONE Majesty also sustained minor damage on Wednesday from an unknown projectile 25 nautical miles (about 46 kilometres) northwest ⁠of Ras al-Khaimah in the United Arab Emirates, two maritime security firms said. Its Japanese owner Mitsui OSK Lines and a spokesperson for Ocean Network Express, its charterer, said the vessel was struck while at anchor in the Gulf, and an inspection of the hull revealed minor damage above the waterline.

All crew are safe, they said, adding that the vessel remains fully operational and seaworthy. The owner said the cause of the incident remained unclear and was under investigation.

A third vessel, a bulk ‌carrier, was also hit by an unknown projectile approximately 50 nautical miles (about 93km) northwest of Dubai, maritime security firms said.

The projectile had damaged the hull of the Marshall Islands-flagged Star Gwyneth, maritime risk management company Vanguard said, adding that the vessel’s crew were safe. Owner Star Bulk Carriers said the ship was hit in the hold area while it was anchored. There were no crew injuries and no listing.

The US Navy has refused near-daily requests from the shipping industry ⁠for military escorts through the Strait of Hormuz since the start of the war on Iran, saying the risk of attacks is too high for now, sources familiar with the matter told Reuters.

The Bahraini interior ministry released footage of a massive blaze at a fuel storage facility following an Iranian attack. Bahrain hosts the US Navy’s Fifth Fleet and has been consistently targeted amid the US-Israeli initiated war.

Some supporters of the US-Israeli war on Iran are using the treatment of women in the country as a justification for bombing it. Al Jazeera’s Ava Warriner explains.

Two foreign tankers were seen ablaze in Iraqi territorial waters after a strike near the al-Faw port. Authorities say they evacuated 25 crew members but have confirmed at least one death and are battling to control the flames.

Global currency and commodity markets stabilised slightly on Tuesday after a volatile start to the week triggered by the war involving Iran, United States and Israel. The U.S. dollar steadied against major currencies after earlier declines, following remarks from U.S. President Donald Trump that the conflict could end “very soon.”

Financial markets had been thrown into turmoil a day earlier amid fears that a prolonged war could trigger a major global energy shock. The conflict has disrupted oil and gas exports through the critical Strait of Hormuz, a vital shipping route for global energy supplies.

Although markets calmed somewhat after Trump’s comments, the broader environment remains highly uncertain as investors continue to assess the potential economic fallout from the conflict.

Dollar Holds Ground as Oil Prices Ease

In Asian trading, the U.S. dollar was largely steady against other major currencies after retreating from the highs reached during Monday’s market turbulence.

The currency traded at around 157.73 yen against the Japanese yen and about $1.1632 against the euro, reflecting a stabilisation following the sharp movements seen earlier.

Meanwhile, oil prices remained elevated but declined from the dramatic peaks reached at the start of the week. Brent crude traded at roughly $93 per barrel, still significantly higher than levels before the outbreak of the war but well below Monday’s surge toward $120.

The pullback in oil prices helped ease immediate concerns about a severe energy shock, although analysts caution that volatility could continue if the conflict escalates again.

Investors Remain Cautious

Despite the relative calm in currency markets, analysts say investors are far from convinced that the crisis is nearing resolution.

Rodrigo Catril, a currency strategist at National Australia Bank, warned that markets could continue to experience sudden shifts in sentiment as geopolitical developments unfold.

According to Catril, it remains unclear whether the Iranian leadership would be willing to pursue de-escalation, suggesting that the risk of renewed market volatility remains high.

The Islamic Revolutionary Guard Corps in Iran dismissed Trump’s suggestion that the conflict could end quickly, describing the remarks as “nonsense.”

Risk-Sensitive Currencies Under Pressure

Currencies closely linked to global economic sentiment weakened as investors remained cautious.

The Australian dollar slipped to around $0.7063, while the New Zealand dollar fell to roughly $0.5912. These currencies often decline during periods of geopolitical uncertainty or when investors shift toward safer assets.

The dollar, by contrast, has benefited from its traditional role as a safe-haven currency during times of crisis. The escalation of the conflict and disruption to energy markets prompted investors to move funds into U.S. assets, supporting the currency.

The British pound recovered from losses earlier in the week to trade around $1.3434.

Energy Prices and Global Growth Concerns

Investors remain concerned that sustained high energy prices could slow global economic growth. Rising oil costs increase expenses for businesses and households, effectively acting as a tax on economic activity.

At the same time, higher energy prices could complicate monetary policy by pushing inflation upward and making it harder for central banks to lower interest rates.

Analysts at Deutsche Bank noted that a broader market sell-off in risk assets would likely require several conditions to occur simultaneously: persistently high oil prices, a shift in central bank policy expectations and clear evidence of a slowing global economy.

Strategist Henry Allen said markets are now significantly closer to those thresholds than they were just a week ago, though the full conditions for a major downturn have not yet materialised.

Analysis: Markets Brace for Prolonged Volatility

The market reaction to the Iran war underscores how closely global financial conditions are tied to geopolitical developments in the Middle East.

While Trump’s comments about a possible quick end to the conflict helped stabilise markets temporarily, the underlying risks remain substantial. The disruption of energy supplies through the Strait of Hormuz continues to threaten global oil flows and could trigger renewed price spikes if the conflict intensifies.

For investors, the situation presents a delicate balance. On one hand, hopes for de-escalation could stabilise energy prices and reduce pressure on financial markets. On the other, continued fighting or further disruptions to oil shipments could quickly reignite volatility across currencies, commodities and equities.

Until there is clearer evidence of either de-escalation or escalation, markets are likely to remain highly sensitive to political developments, with the dollar continuing to benefit from its role as a global safe haven.

With information from Reuters.