Iran Strikes Ships and Expands No-Go Zone Beyond Hormuz as Oil Tops $100

By Michael Turner|Senior Markets Correspondent
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Iran Strikes Ships and Expands No-Go Zone Beyond Hormuz as Oil Tops $100

Iran said its Revolutionary Guards attacked more than a dozen vessels trying to pass through the Strait of Hormuz on Wednesday and announced it was expanding a no-go zone beyond the strategic waterway, which Tehran has effectively blockaded for months.

The new attacks and renewed fighting with the United States pushed oil prices above $100 a barrel again. Brent crude closed at $101.21, as Tehran tightened its chokehold on the strait and Washington pressed a counter-blockade of Iranian ports.

Iran's Revolutionary Guards said they struck two U.S. vessels, eight oil tankers, and 10 "non-compliant vessels" that were attempting to transit the route, according to Iranian state media. The strait is the world's most important oil and gas chokepoint, normally carrying about one-fifth of global oil and liquefied natural gas supplies.

The United Kingdom Maritime Trade Operations, or UKMTO, said "several" vessels in the Gulf of Oman and the Gulf were "subject to disabling fire" amid ongoing military activity in the region.

The Gulf of Oman lies on the Indian Ocean side of the narrow Strait of Hormuz. On Wednesday, the Guards also added parts of the Gulf of Oman and the Arabian Sea to a newly declared "prohibited zone," saying exact coordinates would be released later.

"If a vessel enters that area without coordination, it will be subject to our sanctions," Guards spokesman Hossein Mohebi told state television.

The Guards also said they struck a U.S. military base in Jordan in response to U.S. forces destroying five Iranian oil tankers a day earlier. Jordan's army said it shot down 18 missiles fired at the kingdom.

Iran's Foreign Ministry condemned the attack on its oil tankers as "an overt threat to regional and international peace and security," warning that the strikes "increase the dangers of tensions in the region." It described the targeting of U.S. military facilities in the region as "self-defense."

The U.S. military said it was responding to an Iranian attack targeting an American warship, the second such incident in less than a week.

A longer war?

Iran's Revolutionary Guards, the ideological arm of the military, said the war could be brought to an end if Washington met its conditions, including demands tied to the conflicts in Lebanon and Yemen.

"It must... refrain from renewed threats, withdraw the Israeli regime's army from Lebanon, end the blockade of Yemen, release $24 billion in Iran's frozen assets and refrain from any interference in the country's nuclear and missile capabilities," Mohebi said, according to Fars news agency.

President Donald Trump, eager to end a war that polls show is unpopular, asserted Wednesday that the conflict will conclude right after the U.S. midterm elections in November. Polls suggest his Republican Party could face a drubbing and lose control of one or both chambers of Congress.

"I think the war will end immediately after the election" because Iran "can't hold out any longer," Trump told journalists, accusing Tehran of being "desperate to try and affect" the vote.

The Wall Street Journal, however, quoted U.S. officials saying Trump's top advisers are privately warning that the war could drag on through the remaining two years of his term.

Nuclear referral

As Washington tries to choke off Iran economically, the International Atomic Energy Agency's board of governors voted Wednesday to refer Iran to the U.N. Security Council over its nuclear "non-compliance," a diplomatic move that piles more pressure on Tehran.

The resolution, seen by AFP, was adopted by a 23-3 vote with eight abstentions. Russia, China and Niger voted against it.

Iran's representative to the U.N. nuclear watchdog said the resolution was passed under U.S. pressure and "has no basis and will not bring any results."

Israeli Prime Minister Benjamin Netanyahu repeated his claim that Iran was about to collapse. "The main task is to bring down the terror regime in Iran. We are very close to that," he said Wednesday during a troop visit in southern Syria, where Israel has occupied what it calls a "security zone."

Tanker strikes

The latest round of U.S.-Iran fighting was triggered after American forces destroyed five Iranian oil tankers Tuesday. The U.S. military said it "directed the crews to abandon ship" before hitting the vessels.

"Iran continues to try to hit U.S. naval ships, and for every time they do that or try to do that, they're going to lose tankers, and I think you'll see that again today," Secretary of State Marco Rubio told reporters Tuesday during a visit to Colombia.

Iran has asserted control of the Strait of Hormuz since U.S.-Israeli strikes began the war in February, with traffic through the waterway virtually paralyzed. Tehran requires vessels to obtain permission and pay transit fees before using the strait.

The standoff now threatens to ripple well beyond the Middle East. With about a fifth of the world's oil and gas normally moving through Hormuz, prolonged disruption could raise shipping and insurance costs, sharpen inflation risks and force energy-importing economies in Asia and Europe to seek alternatives. It also narrows the space for diplomacy, even as the IAEA referral adds another layer of international pressure on Tehran.

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