Zürcher Nachrichten - Defiant Iran vows to block Gulf oil until US-Israel bombing stops

Oil prices have surged since Iranian attacks on shipping closed the Strait of Hormuz in the wake of a US-Israeli strikes that killed Tehran's supreme leader but fell back somewhat on Monday when US President Donald Trump suggested the war would soon end.

The price began to rise again Tuesday amid more threats and violence, following a week of attacks on oil infrastructure in Saudi Arabia, Bahrain, the UAE and around the Gulf.

The region's biggest single-site oil refinery, at Ruwais in the UAE, was closed on Tuesday as a precaution after a drone attack on the industrial complex which houses it caused a fire, a source familiar with the situation told AFP.

"The Strait of Hormuz will either be a strait of peace and prosperity for all or will be a strait of defeat and suffering for warmongers," Iran's security chief Ali Larijani declared.

The price increase also followed strikes on oil depots in Iran and after attacks on oil infrastructure in Saudi Arabia, Bahrain and around the Gulf, which continued on Tuesday, with explosions heard in Doha.

Qatar, where a suspension of LNG exports has sent European energy prices sky-high, said Iranian attacks on its civilian infrastructure were continuing.

The Israeli military announced meanwhile a new wave of attacks on Tehran, while the US also stepped up its air and missile assault.

"Today will be yet again our most intense day of strikes inside Iran," Defense Secretary Pete Hegseth told a news conference at the Pentagon.

- 'Catastrophic consequences' -

The exchanges of fire will increase fears of economic instability, with traders and energy policy makers nervously following events in the Gulf, source of around a fifth of world oil and gas supplies.

"There would be catastrophic consequences for the world's oil markets the longer the disruption goes on, and the more drastic the consequences for the global economy," Saudi oil giant Aramco's president and CEO Amin H. Nasser told journalists.

"It's absolutely critical that shipping resumes in the Strait of Hormuz."

Egypt increased the cost of fuels by up to 30 percent and Pakistan said it would provide naval escorts to commercial shipping. France has dispatched warships to the region.

Iran's Revolutionary Guards Corps (IRGC) mocked Trump's bid to lessen the economic impact of the war, warning: "The Iranian armed forces... will not allow the export of a single litre of oil from the region to the hostile side and its partners until further notice."

"It is we who will determine the end of the war," the IRGC, seen as close to Iran's new supreme leader Ayatollah Mojtaba Khamenei, said in a statement carried by Iranian media.

Larijani issued a thinly veiled threat to Trump himself, warning him to be careful "not to be eliminated".

"Iran is not afraid of your empty threats. Even those greater than you could not eliminate the Iranian nation," Larijani wrote, in a social media post.

- 'Death, fire and fury' -

Iran's warnings came as a response to Trump, who gave a news conference in a Florida ballroom to declare of the war: "It's going to be ended soon, and if it starts up again they'll be hit even harder."

"We've already won in many ways, but we haven't won enough," Trump said Monday.

But, in a later post on his social media platform, Trump warned that if Tehran interferes with oil exports, the US military will bomb the country in such a way to "make it virtually impossible for Iran to ever be built back, as a nation, again."

"Death, fire, and fury will reign upon them — But I hope, and pray, that it does not happen!" he wrote.

Israel's Prime Minister Benjamin Netanyahu also predicted that the conflict would continue, expressing hope that the Iranian people would seize the opportunity to "cast off the yoke of tyranny".

"Ultimately, it depends on them. But there is no doubt that, with the actions taken so far, we are breaking their bones, and we are not done yet," he said.

- Rare volatility -

On Monday, world oil prices swept past the symbolic level of $100 a barrel and were briefly up 30 percent on the day, before falling back after Trump's intervention. But they rose again more slowly on Tuesday, and experts warned that the economic outlook remains extremely volatile.

"Rare are days in the markets when you get this much volatility," said Ipek Ozkardeskaya, an analyst for Swissquote Bank, warning that investors are overreacting to every bit of news even when officials' statements contradict each other.

"Part of yesterday's optimism came after Trump said the war would end 'soon' and that the US was ahead of schedule," she said.

"Concretely, however, the conflict in the Middle East continues at full speed, political developments are not pointing to a near-term resolution, and there is little clarity about the US plans."

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D.Smith--NZN