With the conflict heading towards its third week and showing no signs of ending, investors are growing increasingly worried about an extended crisis that could fan inflation and hammer the global economy.
Tehran has targeted energy facilities this week across the Gulf, with ships hit near Iraq, fuel tanks attacked in Bahrain and drones fired at oilfields in Saudi Arabia.
And it warned on Thursday that it would “set the region’s oil and gas on fire” if its own energy infrastructure and ports were targeted.
In his first public comments since succeeding his father four days ago, Ayatollah Mojtaba Khamenei said the Strait of Hormuz — through which a fifth of global oil and gas passes — must remain effectively shut. Khamenei also called for bases hosting US forces in region to close or attacks will continue.
“The lever of blocking the Strait of Hormuz must definitely be used,” Khamenei said in a message read by an anchor on state television.
He also said “studies have been conducted into opening other fronts where the enemy has little experience and would be highly vulnerable, and their activation will take place if the state of war persists”.
Khamenei vowed to avenge the Iranian casualties in the conflict.
Khamenei himself was wounded in the strikes, according to some Iranian officials and state TV. His whereabouts and details of his physical condition are unknown, prompting Israeli leader Benjamin Netanyahu to call on him to “show his face”.
Crude surged more than nine percent Thursday, with Brent ending above $100 for the first time since 2022 when Russia launched its invasion of Ukraine. Brent is up around 40 percent since the Middle East war began on February 28.
And it held there in early Friday business, with analysts saying the record 400 million barrels released from International Energy Agency stockpiles had little impact.
The IEA said Thursday that the war “is creating the largest supply disruption in the history of the global oil market”.
Meanwhile, Donald Trump has faced intense political pressure as the global economic fallout of the crisis has mounted, while markets have brushed off his assertions that the battle would be short-lived.
The US president struck a defiant tone in a social media post Thursday, writing that 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”.
“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.”
However, Pepperstone’s Chris Weston said: “With crude closing near its highs, markets are increasingly pricing in a longer duration for the conflict and the continued impact of a potential closure of the Strait of Hormuz.
“Donald Trump may continue to explore the idea of assisting vessels through the strait, and if that were to materialise the market could see a strong relief rally.
“For now, however, the dominant features are higher energy prices and extremely elevated volatility markets.”
French soldier killed in Iraqi Kurdistan
A French soldier was killed in an attack in Iraq’s autonomous Kurdistan region, President Emmanuel Macron said on Friday, confirming the first French military death in the Middle East war.
Since US-Israeli strikes on Iran last month engulfed the Middle East in war, multiple attacks attributed to pro-Iranian factions have targeted the region where foreign forces are based as part of an international anti-jihadist coalition.
New missile wave targets Israel
The Israeli military said early Friday that Iran fired a new barrage of missiles toward Israel, with emergency services reporting that two were injured in the country’s north.
“A short while ago, the IDF identified missiles launched from Iran toward the territory of the State of Israel. Defensive systems are operating to intercept the threat,” the military posted on Telegram.
Saudi Arabia intercepts drones
Saudi Arabia intercepted dozens of drones entering its airspace, the defence ministry said Friday, as Iran carries out attacks on oil-rich Gulf countries in response to US-Israeli strikes.
“Twelve drones were intercepted and destroyed after entering Saudi airspace,” a ministry spokesperson posted on X, after authorities reported at least 16 other drones were also shot down.
Trump: war moving ‘rapidly’
US President Donald Trump told reporters the war against Iran was moving “very rapidly.”
“It’s doing very well, our military is unsurpassed,” he said at the White House, not directly responding to the latest comments from Iran’s new supreme leader.
Israel strikes Basij force
Israel’s military said it had struck checkpoints set up in the Iranian capital Tehran by the Basij paramilitary force of Iran’s Revolutionary Guards as part of efforts to undermine control by the authorities.
Later, the Israeli military said it launched a new broad wave of strikes in Tehran on Thursday evening, pressing ahead with its campaign against Iran for a 13th day.
Iraq-Syria border strikes
Air strikes killed at least 11 Iran-backed fighters in Iraq on Thursday near the Iraqi-Syrian border and in the capital Baghdad, senior security and armed faction officials told AFP.
Iraqi authorities denounced the “blatant attacks” on bases that belong to the Hashed al-Shaabi, a former paramilitary group now integrated into the regular army, which also encompasses brigades from Iran-backed armed groups.
Hormuz mines
Iran is not laying mines in the Strait of Hormuz, its deputy foreign minister said, after Trump said US forces had struck 28 Iranian mine-laying vessels in the waterway.
He told AFP that Iran was allowing ships from some countries to cross the narrow shipping lane that has remained effectively closed during the war.
Beirut strikes
Israel continued striking Beirut as it threatened to expand operations and seize territory in Lebanon if the militant group Hezbollah did not stop its attacks.
AFPTV footage showed dark smoke rising into the sky above Bashoura, in the heart of Beirut.
IEA: biggest oil shock ever
The war “is creating the largest supply disruption in the history of the global oil market”, as Iran’s chokehold on regional supplies forces Gulf producers to slash production, the International Energy Agency said.
An IEA market report said crude oil production was currently down by at least eight million barrels per day.
Israel moves deeper into Lebanon
The Israeli military moved further into southern Lebanon, telling residents to “move immediately north of the Zahrani River”, 40 kilometres (25 miles) from the Israeli border.
It said the Iran-backed Lebanese group Hezbollah had launched “approximately 200 rockets” towards it overnight, in what it said was the biggest barrage of the war so far.