Iran warned on Tuesday that it would reciprocate if the United States honored its commitments under a June interim agreement, but tensions remained dangerously high after President Donald Trump threatened Tehran with additional military action. The renewed hostilities, combined with reports of two oil tankers coming under fire near the Strait of Hormuz, have reignited fears of a prolonged conflict and significant disruptions to global oil supplies.
Oil prices climbed following the first direct exchange of attacks between the two nations since late July. Shipping intelligence firms Marisks and Kpler reported that two supertankers carrying Saudi crude were struck by unknown projectiles within minutes of each other while transiting outbound through the Strait of Hormuz late Monday. The strait, a critical chokepoint for global energy shipments, has been effectively closed to normal shipping by Iran for months.
The six-month-old conflict had largely shifted into an economic standoff before a US attack on Iran’s Larak Island on Sunday. Iran responded overnight by launching missiles at two US air bases in Jordan. President Trump, speaking to Fox News on Monday, signaled further military action was possible. “We’re going to hit them hard… There will be a response,” Trump said, though he separately told reporters that the renewed strikes did not signal a return to full-scale war.
Limited Confrontation, But High Stakes
A senior Iranian source described the recent exchanges of fire as a “limited and contained confrontation” but emphasized that Tehran would deliver a harsh response if attacked again. While neither side appears eager to return to all-out war, their mutual pledges to retaliate highlight how quickly a conflict increasingly fought through sanctions, blockades, and economic pressure could escalate back into direct military action.
Iranian President Masoud Pezeshkian, speaking at a summit of the Shanghai Cooperation Organisation in Bishkek, Kyrgyzstan, reiterated that Tehran would allow free navigation through the Strait of Hormuz only if Washington implemented the terms of the Memorandum of Understanding signed in June. That agreement declared an end to fighting but deferred many of the most difficult issues and paved the way for a broader 60-day negotiation period, which passed without further agreement.
“I am stating clearly that if the US returns to its commitments under the MoU, the Islamic Republic of Iran will immediately reciprocate,” Pezeshkian said. He had also said on Monday that war was in no one’s interest and that Tehran remained open to a negotiated solution.
Oil Markets on Edge
Despite diplomatic overtures, there has been no sign of a breakthrough. Brent crude futures rose another 1.3% on Tuesday, extending gains as traders priced in the risk of supply disruptions from the world’s key crude-producing region. “The tit-for-tat missile exchanges between the US and Iran bring validation to those who believe that even if not a ‘forever war,’ this conflict will run and run,” said PVM analyst John Evans.
Thousands have been killed in the conflict, mainly in Iran and Lebanon, since it began with US and Israeli strikes on Iran on February 28. Washington has increasingly relied on economic pressure to try to force Tehran to stop blockading the strait and end the conflict. US Treasury Secretary Scott Bessent has warned that countries doing business with Iran could face US sanctions and said secondary sanctions are likely to be unveiled weekly, with an initial focus on banks.
Iran Defends Economic Resilience
Iran’s central bank governor, Abdolnaser Hemmati, pushed back against the economic pressure on Tuesday, stating that Tehran had sufficient foreign currency reserves. The central bank was ready to inject up to $2 billion into the foreign exchange market to calm recent volatility, Hemmati was quoted as saying by the semi-official Tasnim news agency.
“I am telling the president of the United States: Iran has currency and it has enough,” he said. His comments appeared partly aimed at reassuring markets after Iranian officials, including Pezeshkian, pointed to growing difficulties for Iran’s economy. Iran’s currency plunged to a record low in August, crossing the psychological threshold of 2 million rials to the dollar, while annual inflation reached 66% in July.
The situation remains highly volatile. With both sides signaling willingness to strike again and no diplomatic channel producing results, the risk of a wider confrontation—and further disruption to global energy markets—continues to loom large.
