TEL AVIV/WASHINGTON (Reuters) – US President Donald Trump and Iran threatened to escalate their war by attacking energy facilities in the Gulf, a potential widening of hostilities which could deepen a regional crisis and add to concerns in global markets.
Air raid sirens sounded across Israel from the early hours of Sunday morning, warning of incoming missiles from Iran, after scores of people were hurt overnight in two separate attacks in the southern Israeli towns of Arad and Dimona.
The Israeli military said on Sunday it was striking Tehran just hours after Iran’s attacks on southern Israel.
Trump on Saturday threatened to “obliterate” Iran’s power plants if Tehran did not fully reopen the Strait of Hormuz within 48 hours, a significant escalation barely a day after he talked about “winding down” the war, now in its fourth week.
Iran warned on Sunday it would attack US infrastructure, including energy facilities in the Gulf, if Trump carried out his threat, which he made as US Marines and heavy landing craft continue to head to the region.
More than 2,000 people have been killed during the war the US and Israel launched on February 28, which has upended markets, spiked fuel costs, fuelled global inflation fears and convulsed the postwar Western alliance.
“President Trump’s threat has now placed a 48-hour ticking time bomb of elevated uncertainty over markets. If the ultimatum is not walked back, we will likely see a Black Monday reopening of global equity markets in free fall and oil prices spiking significantly higher,” said IG market analyst Tony Sycamore.
Tehran would likely strike Gulf energy facilities in Saudi Arabia, the United Arab Emirates and Qatar, which “would deepen and prolong the pain of higher energy prices”, Sycamore said.
Iranian attacks have effectively closed the Strait of Hormuz, a narrow choke point that carries around a fifth of global oil and liquefied natural gas supplies, causing the worst oil crisis since the 1970s. Its near-closure sent European gas prices surging as much as 35% last week.
