Donald Trump, Iran trade threats over energy targets as war escalates

Tensions rise as Trump threatens to attack Iran's energy infrastructure if the Strait of Hormuz remains closed.

U.S. 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 U.S. infrastructure, including energy facilities in the Gulf, if Trump carried out his threat, which he made as U.S. Marines and heavy landing craft continue to head to the region.

More than 2,000 people have been killed during the war the U.S. and Israel launched on February 28, which has upended markets, spiked fuel costs, fuelled global inflation fears and convulsed the postwar Western alliance.

ELEVATED UNCERTAINTY

"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.

Oil prices jumped on Friday and settled at their highest in nearly four years, after Iraq declared force majeure on all oilfields developed by foreign firms, Israel attacked a major gas field in Iran and Tehran responded with strikes on neighbours, Saudi Arabia, Qatar and Kuwait.

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.

"If Iran doesn't FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz, within 48 HOURS from this exact point in time, the United States of America will hit and obliterate their various POWER PLANTS, STARTING WITH THE BIGGEST ONE FIRST!" Trump posted on social media around 7:45 p.m. EDT (2345 GMT) on Saturday.

The Strait of Hormuz remains open to all shipping except vessels linked to "Iran's enemies", Iran's representative to the International Maritime Organisation was quoted as saying in Iranian media reports published on Sunday.

Ali Mousavi was speaking earlier in the week to Chinese news agency Xinhua, before Trump's threat to attack Iranian power plants if the strait was not "fully open" within 48 hours. Mousavi said passage through the waterway was possible by coordinating security and safety arrangements with Tehran.

Ship-tracking data has shown some vessels, such as Indian-flagged ships and a Pakistani oil tanker, have negotiated safe passage through the strait. Pakistan has good ties with Iran while keeping close relations with the U.S. and Saudi Arabia.

Iran's Khatam al-Anbiya military command headquarters said on Sunday if the U.S. attacked Iran's fuel and energy infrastructure, Iran would launch attacks on all U.S. energy, information technology and desalination infrastructure in the region.

The Islamic republic's power grid is deeply intertwined with its energy sector. Striking major plants could trigger blackouts, crippling everything from pumps and refineries to export terminals and military command centres.