US-Iran conflict expands as oil shipping through Hormuz slows

The conflict between the United States and Iran escalated sharply on Thursday after Washington struck an oil tanker near Iran's main export terminal at Kharg Island for the first time since reimposing a blockade on the country's ports, signalling a broader military campaign that now extends beyond conventional military targets.

The attack, deep inside the Persian Gulf, came as the US intensified pressure on Tehran over its continued restrictions on shipping through the Strait of Hormuz — a critical global energy chokepoint through which nearly a fifth of the world's oil passes.

Also Read: Iran warns Strait of Hormuz is a 'red line' and will resist until the end


Iran responded by launching missiles at US military bases in Kuwait and Jordan, according to Bloomberg. Jordanian authorities said eight missiles were intercepted before they could reach their targets.

The latest developments suggest both sides are widening the scope of the conflict even as prospects for diplomacy continue to fade.

US President Donald Trump warned that Washington would continue expanding its strikes until Iran reopens the Strait of Hormuz, indicating that key infrastructure such as bridges and power plants could become future targets.

Iran, however, showed no signs of backing down.

"As long as the United States does not accept the Iranian legal system, this strait will remain closed," an Iranian army spokesperson was quoted as saying by the semi-official Iranian Students' News Agency (ISNA), referring to Tehran's demand that vessels obtain Iranian permission and comply with its regulations before transiting the waterway.

Iran also warned that any US attacks on civilian infrastructure would trigger a much broader regional response.

According to Iran's state-run IRNA news agency, a spokesperson for the country's central military command said that "everything that has remained intact so far due to Iran's restraint" across the region could become a target if the US escalates further.

Peace deal under strain

The military escalation has further weakened a fragile memorandum of understanding (MoU) signed by Washington and Tehran roughly a month ago, which had sought to facilitate the reopening of the Strait of Hormuz after weeks of disruption.

Iranian parliamentary speaker Mohammad Bagher Ghalibaf said Tehran no longer had "any reason to remain committed" to the interim agreement, although he stopped short of announcing a formal withdrawal.

The US and Iran have repeatedly accused each other of violating the terms of the understanding, particularly over the pace at which shipping through Hormuz was expected to resume.

The latest flare-up follows Washington's decision last week to reimpose a blockade on Iranian ports and end a sanctions waiver covering parts of Iran's oil trade.

US Vice President JD Vance defended the administration's strategy, describing it as a combination of military pressure, sanctions and diplomacy.

Speaking on Joe Rogan's podcast, Vance said Washington remained open to negotiations but ruled out deploying large numbers of US ground troops to pursue regime change.

"We're not going to send 150,000 ground troops... unless the people on the ground themselves want to accomplish that outcome," he said.

Shipping disruption deepens

The US military said it had struck an unladen, Curaçao-flagged supertanker that ignored repeated warnings while heading towards an Iranian port near Kharg Island. It also said American naval forces escorted more than ten commercial vessels safely through the Strait of Hormuz overnight.

Also Read: Iran threatens to destroy 'all infrastructure in region' as US strikes intensify

Despite those efforts, commercial shipping through the strategic waterway has slowed significantly.

According to RBC Capital Markets, average daily oil flows through Hormuz have dropped to about 3.9 million barrels over the past week from roughly 4.6 million barrels earlier.

"The ceasefire is over, with vessels under heavy Iranian fire," RBC analysts led by Helima Croft said in a note, adding that shipping volumes are unlikely to recover while vessels continue to face threats from missiles, drones, naval mines and Iranian transit charges.

The disruption has kept energy markets on edge. Brent crude eased slightly on Thursday but remained around $85 a barrel, still about 11% higher for the week amid concerns over prolonged supply disruptions.

Diplomatic signals remain mixed

Even as military action intensified, Trump claimed Tehran had expressed interest in reviving negotiations.

"We received a call... that they want to meet," he said during an interview with Fox Business, although Iran has not publicly confirmed any fresh diplomatic outreach.

Trump also announced that Iran had released an American citizen detained since December 2024, describing the move as a "gesture of goodwill". The individual was later identified by her lawyer as Dena Karari, a dual US-Iranian citizen.

Meanwhile, the latest US strikes have largely focused on military installations in southern Iran, including missile, drone and radar facilities. However, analysts note that the campaign remains less intensive than the large-scale bombardment seen during the peak of hostilities in March and April.

In Washington, Congressional Republicans are pushing for higher defence spending despite growing political concerns over the economic costs of the conflict ahead of November's midterm elections.

The White House is also considering extending shipping waivers to facilitate the movement of oil, fuel and fertilisers as prolonged disruptions in the Gulf threaten global supply chains and commodity markets.

(With inputs from Bloomberg)