Iran said on Tuesday it would reciprocate if the United States honoured its commitments under a June interim deal on halting their conflict, but tensions remained high after US President Donald Trump threatened Tehran with further strikes.
Oil prices rose after the first exchange of direct attacks since late July, and following reports of two tankers coming under fire leaving the Strait of Hormuz, the global oil supply waterway that Iran has effectively closed to shipping.
The six-month-old conflict had shifted into an economic standoff before a US attack on Iran’s Larak Island on Sunday, which Iran responded to by launching missiles overnight at two US air bases in Jordan.
“We’re going to hit them hard … There will be a response,” a Fox News reporter quoted Trump as telling the channel on Monday, although the president separately told reporters that the renewed strikes did not signal a return to full-scale war.
A senior Iranian source told Reuters the exchanges of fire were a “limited and contained confrontation” but said Tehran would deliver a harsh response if attacked again.
While neither side appears to want a return to all-out war, their pledges to respond to further attacks highlight how quickly a conflict that has increasingly been fought through sanctions, blockades and economic pressure could spill back into military action.
Fears that Iran conflict could ‘run and run’
Tehran has repeatedly said it will allow free navigation through the Strait of Hormuz only if Washington implements the terms of the Memorandum of Understanding (MoU) that was signed by both sides in June but quickly unravelled.
The MoU 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,” Iranian President Masoud Pezeshkian said.
He was speaking in Bishkek, capital of Kyrgyzstan, during a summit of the Shanghai Cooperation Organisation (SCO), whose members also include Russia, China, India and Pakistan.
He had also said on Monday that war was in no one’s interest and that Tehran was still open to a negotiated solution.
But there has been no sign of a breakthrough and the heightened tensions this week have renewed fears of oil supply disruptions from the world’s key crude-producing region, with Brent futures LCOc1 rising another 1.3% on Tuesday.
“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.
Highlighting such concerns, two supertankers carrying Saudi oil were struck by unknown projectiles within minutes of each other while transiting outbound through the Strait of Hormuz late on Monday, according to data from shipping intelligence and tracking firms Marisks and Kpler.
Economic pressure
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 in the effort to pressure Iran, with an initial focus on banks.
Iran’s central bank governor, Abdolnaser Hemmati, said on Tuesday 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 (foreign) 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.
