Oil prices hovered just above $100 on Tuesday on hopes of a de-escalation of conflict in the Middle East.
Image: Ander Gillenea / AFP
Oil prices sank, and most stocks rose on Tuesday, following a report that indicated Donald Trump was willing to end the Iran war even if the key Strait of Hormuz remained closed.
But investors remain wary as the Wall Street Journal story came on the same day the US president threatened to destroy Iran's key oil export hub and desalination plants unless it accepts a deal, while also suggesting diplomacy was making headway.
The news comes as governments around the world scramble to implement measures to ease the burden of surging fuel prices while also looking to conserve energy, with one-fifth of global crude and gas passing through the waterway.
The Journal, citing administration officials, said Trump and his aides had come to the conclusion that a mission to reopen the waterway would extend the length of the mission past his four- to six-week timeline.
It added that he had decided to focus on battering Iran's missiles and navy, before looking to pressure Iran diplomatically to reopen the Strait.
Both main oil contracts fell on Tuesday, though West Texas Intermediate and Brent were still sitting well above $100 a barrel.
However, Trump also threatened Monday to destroy Kharg Island, through which most of Iran's crude passes, if a peace deal is not reached.
He warned US forces would destroy "all of their Electric Generating Plants, Oil Wells and Kharg Island (and possibly all desalination plants!)."
Destroying civilian infrastructure could constitute a war crime, experts say.
Iran has previously threatened to retaliate by targeting energy infrastructure and desalination plants in its Arab neighbours that host the US military, fanning fears of a wider conflict.
But Trump also said officials were speaking to a "more reasonable regime" in Tehran, which has denied any talks and accused the president of lying about negotiations as cover while preparing a ground invasion.
US Secretary of State Marco Rubio voiced hope for working with elements within Iran's government.
Market experts warned that any US ground operation or wider Iranian retaliation could send oil prices to levels not seen since July 2008, when Brent hit almost $150 a barrel.
In a sign Iran was determined to keep control of Hormuz, state media reported Monday that a parliamentary commission had approved plans to impose tolls on vessels transiting it.
The Israeli military said on Tuesday that four soldiers had been killed in combat in southern Lebanon, where its forces are clashing with Iran-backed Hezbollah.
A military statement named three soldiers from the same battalion who "fell during combat", and a separate statement said another soldier whose name had not yet been cleared for publication had died in the same incident.
Another soldier was severely wounded, and a reservist was moderately wounded, according to the second statement.
Israel's military said its air defences responded to Iranian missiles on Tuesday as sirens rang out.
At least 10 blasts were heard over Jerusalem, an AFP journalist said.
"A short while ago, the IDF identified missiles launched from Iran toward the territory of the State of Israel," the Israeli military posted on Telegram.
Explosions were heard in Tehran, and power cuts hit some parts of the capital, Iranian media reported on Tuesday.
"Power outages in parts of Tehran after multiple explosions heard," Fars news agency reported.
Tasnim news agency reported that power has now been restored in the affected areas.
Iraq's Popular Mobilisation Forces (PMF) said US-Israeli forces carried out air strikes on two of their bases in the Babil and Anbar provinces.
"The 45th Brigade in the Jurf al-Nasr sector of Babil Governorate was targeted with three airstrikes, while another strike targeted the 31st Brigade in the Karma sector, east of Anbar Governorate," it said on its website.
No casualties were reported.
An Iranian attack sparked a fire on a Kuwaiti oil tanker at Dubai Port, state media reported Tuesday, adding there were no injuries.
"The Kuwaiti giant crude oil tanker was subjected to a direct and malicious Iranian attack while in the anchorage area of Dubai Port in the UAE," official news agency KUNA reported, citing Kuwait's state-owned oil company.
Also in Dubai, falling debris from an air defence interception sparked a fire and wounded four people in the city, authorities said.
Israeli Prime Minister Benjamin Netanyahu said the war on Iran had achieved more than half its aims, without putting a timeline on when it would end.
"It's definitely beyond the halfway point. But I don't want to put a schedule on it," Netanyahu told the conservative US broadcaster Newsmax.
The United Nations Interim Force in Lebanon (UNIFIL) said two personnel were killed on Monday in a blast in the country's south, after another peacekeeper was killed a day earlier.
Two other blue helmets were injured in the explosion, one severely, the force said, adding that it had opened an investigation.
One civilian was wounded in Iraq's capital Baghdad late Monday after shrapnel from an intercepted drone attack targeting the US embassy fell onto their neighbourhood, a police source said.
Iranian state media reported that a parliamentary commission had approved plans to impose tolls on vessels transiting the Strait of Hormuz, the waterway vital to oil and gas shipments that has been effectively closed due to the Middle East war.
Citing a member of the parliament's security commission, state TV said the plan involved, among other things, "financial arrangements and rial toll systems" and "implementing the sovereign role of Iran", as well as cooperation with Oman on the other side of the strait.
G7 economy and finance ministers said they stood ready to take "all necessary measures" to ensure the stability of the energy market, roiled by the war.
NATO forces intercepted a new missile fired from Iran towards Turkey, the fourth since the start of the Middle East war.
None of the four projectiles managed to hit Turkish soil, according to the authorities.
US Secretary of State Marco Rubio voiced hope for working with elements within Iran's government, saying the United States privately had received positive messages.
Rubio said that there were internal "fractures" inside the Islamic Republic and that the United States hoped figures with "power to deliver" would take charge.
Israel's military said it had struck the Imam Hossein University in Tehran, run by Iran's Revolutionary Guards, claiming the institution was used for advanced weapons research.
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