TEHRAN, Iran — Iran's military command issued a stark warning on Wednesday, urging the world to brace for oil prices surging to $200 a barrel amid escalating attacks in the blockaded Persian Gulf, where three more merchant ships fell victim to unidentified projectiles. The alert came as the U.S.-Israeli air campaign against Iran, now in its second week, showed no signs of abating, with Iranian forces retaliating by firing missiles at targets across the Middle East, including a U.S. base in northern Iraq and Israel's naval headquarters in Bahrain.
The conflict, which erupted on February 28 with intense U.S. and Israeli airstrikes, has disrupted a critical chokepoint for global energy supplies: the Strait of Hormuz. A fifth of the world's oil passes through this narrow waterway along Iran's southern coast, and Tehran has vowed not to allow shipments until the attacks cease. Ebrahim Zolfaqari, spokesperson for Iran's military command, directly addressed the United States in his comments, stating, “Get ready for oil to be $200 a barrel, because the oil price depends on regional security which you have destabilized.”
Oil prices, which spiked to nearly $120 a barrel on Monday, have since moderated to around $90, reflecting investor optimism that U.S. President Donald Trump might swiftly resolve the crisis he initiated alongside Israel. However, maritime security agencies reported that the latest incidents brought the total number of ships hit since the war's outset to 14. Crew members were evacuated from a Thai-flagged bulk freighter after an explosion ignited a fire, while a Japanese-flagged container ship and a Marshall Islands-flagged bulk carrier also suffered damage.
In Tehran, the strikes have become a grim routine for residents. Hundreds of thousands have fled to the countryside, and the city has been shrouded in black rain from burning oil facilities. Farshid, a 52-year-old Tehran resident, shared his perspective by phone with Reuters: “There were bombings last night but I did not get scared like before. Life goes on.” Overnight, Iranian forces targeted offices of a bank in the capital, prompting Zolfaqari to warn of further reprisals against financial institutions linked to the U.S. or Israel. He advised people across the Middle East to stay at least 1,000 meters away from banks as a precaution.
The Iranian military's defiance was on full display Wednesday, as massive crowds gathered in Tehran for funerals honoring top commanders killed in the airstrikes. Mourners carried caskets draped in flags and held portraits of the late Supreme Leader Ayatollah Ali Khamenei and his son, Mojtaba Khamenei, who has been named as his successor. According to an Iranian official speaking to Reuters, Mojtaba Khamenei sustained light wounds early in the conflict, when airstrikes claimed the lives of his father, mother, wife, and a son. He has not made any public appearances or statements since the war began nearly two weeks ago. A source indicated that Israel also believes Mojtaba was lightly injured, though no further details were provided.
Israeli officials, meanwhile, expressed a more tempered assessment of the campaign's progress. A senior Israeli official told Reuters that leaders in Jerusalem now privately acknowledge Iran's ruling clerical system could endure the war. Two other Israeli officials noted there were no indications that Washington was nearing an end to the operations. Israel's Defence Minister Israel Katz emphasized the commitment to the mission, declaring on Wednesday, “The operation will continue without any time limit, as long as required, until we achieve all objectives and win the campaign.”
U.S. and Israeli goals, as stated by officials, include dismantling Iran's capacity to project military power abroad and obliterating its nuclear program. They have also called on Iranians to overthrow the clerical regime. Yet, the Pentagon has described the recent strikes as the most intense yet, with no apparent let-up. Iranian police chief Ahmadreza Radan warned of a hardline response to any domestic unrest, saying anyone taking to the streets would be treated “as an enemy, not a protester. All our security forces have their fingers on the trigger.”
The ripple effects extended beyond the Gulf on Tuesday, when Iran launched missiles at a U.S. base in northern Iraq, the U.S. naval headquarters in Bahrain, and sites in central Israel. Explosions echoed in Bahrain, and in Dubai, two drones crashed near the airport, wounding four people. Bahrain's Civil Aviation Affairs announced that several empty Gulf Air planes and cargo aircraft had been relocated to other airports “to ensure the continuity and efficiency of air operations” amid the turmoil.
Israel faced its own barrages before dawn Wednesday, with air defenses intercepting incoming missiles and sirens driving civilians into shelters. In a related escalation, Israel fired a volley at Beirut, targeting Hezbollah positions in Lebanon—the Iran-backed group that has launched solidarity attacks from across the border. Casualties have mounted steadily: Iran's U.N. ambassador, Amir Saeid Iravani, reported more than 1,300 Iranian civilians killed since February 28. Iranian strikes have claimed at least 11 lives in Israel, with two Israeli soldiers dying in Lebanon. The U.S. military confirmed seven American soldiers killed and about 140 wounded.
Scores more have perished in Israeli operations in Lebanon, according to reports. The International Energy Agency is preparing to propose an unprecedented release of 400 million barrels from global strategic reserves—a record amount equivalent to just three weeks of normal flow through the strait. Such a move would take months to implement and might only provide temporary relief if the blockade persists.
President Trump has threatened to strike Iran “twenty times harder” should the strait remain closed, but U.S. officials have not outlined any specific strategy to reopen it militarily. Iran, for its part, has rejected negotiations, insisting the blockade will hold until the assaults end. Stock markets have rebounded somewhat this week, buoyed by hopes of a quick resolution, but analysts caution that prolonged conflict could devastate the global economy.
As the war drags into its third week, the Strait of Hormuz blockade evokes memories of the 1970s oil shocks, when similar disruptions sent prices soaring and triggered recessions worldwide. Governments are scrambling for contingencies, but the human cost on the ground remains stark. In Tehran, funerals doubled as rallies of resolve, while in Israel, officials steel themselves for a drawn-out fight. With no diplomatic breakthroughs in sight, the path forward remains fraught, potentially reshaping energy markets and alliances across the region for years to come.
The uncertainty has already prompted evacuations and relocations far beyond the immediate combat zones. Bahrain's aviation adjustments underscore the broader disruptions to commerce and travel. If Iran's warnings materialize and oil hits $200 a barrel, the economic fallout could ripple through every corner of the globe, from fuel pumps in Appleton to factories in Asia. For now, all eyes remain on Washington, Tehran, and Jerusalem, waiting for the next move in this high-stakes standoff.