(Bloomberg) — The US and Iran clashed again overnight, with Kuwait and Bahrain caught in the crossfire of the most serious flare-up since a ceasefire went into effect in early April.<\/p>\n
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The strikes follow days of rising tension, including over Israeli operations against Tehran-backed Hezbollah militants in Lebanon, that threaten to derail US-Iran talks about an interim peace deal. The sides have agreed on a rough framework to extend their truce by two months and reopen the Strait of Hormuz, though negotiations over the final details are dragging on.<\/p>\n
Oil prices rose amid the latest uptick in fighting, with West Texas Intermediate crude topping $95 a barrel. US stock prices fell as bond yields rose on concern that the escalation of hostilities will hinder prospects for a peace deal, with elevated energy costs fueling inflation risks.<\/p>\n
US President Donald Trump has spent months projecting confidence that an interim agreement, to be followed by further talks over Iran\u2019s nuclear program, is within reach. He\u2019s largely brushed off suggestions the ceasefire, which began on April 8, is fraying.<\/p>\n
Shortly after hitting an empty oil tanker heading to Iran on Tuesday, the US military said it came under missile and drone attack.<\/p>\n
Iran targeted the US\u2019s main naval base in the region, located in Bahrain, and the Ali Al-Salem airbase in Kuwait. At least one person was killed in a separate strike on Kuwait\u2019s civilian airport that caused significant damage and forced a suspensions of flights for a few hours.<\/p>\n
The US said Iran also fired drones at commercial ships. American forces struck a communications tower on the Iranian island of Qeshm near the strait as part of the skirmishes.<\/p>\n
Secretary of State Marco Rubio Wednesday told the House Foreign Affairs Committee the US was shooting down Iranian drones aimed at commercial vessels.<\/p>\n
\u201cAt that point, the Iranians will respond to that by targeting some facility in the region in retribution,\u201d he added. \u201cOn occasion, in order to protect our own forces, we don\u2019t just strike the drones, we strike the people who launch those drones.\u201d<\/p>\n
Iran\u2019s foreign ministry said the US attacks on the Iranian tanker and Qeshm were launched from Kuwait and Bahrain, whose rulers bear a \u201cdirect and clear responsibility\u201d for Washington\u2019s actions. Kuwait rejected the accusation and expelled two Iranian diplomats in protest for the airport strike, as ties between the Gulf nations become further strained.<\/p>\n
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In Lebanon, the US and Israel have different ideas about what an end to the war should look like. Israel is keen to continue attacking Hezbollah, while Iran insists there must be a ceasefire there too as part of an interim accord with the US. Trump urged Israeli Prime Minister Benjamin Netanyahu in a call on Monday to abandon plans to bomb the Lebanese capital of Beirut.<\/p>\n
Trump confirmed Wednesday having used expletives during the tense call.<\/p>\n
\u201cI was a little bit perturbed at him constantly fighting with Lebanon,\u201d Trump said during a conversation with the host of the Pod Force One podcast, which aired Wednesday.<\/p>\n
In an interview aired on CNBC on Wednesday. Netanyahu said his relationship with Trump had not shifted after the incident. \u201cHe\u2019s been the greatest friend that Israel has ever had in the White House,\u201d he said.<\/p>\n
Maritime traffic through the Strait of Hormuz, which normally handles one fifth of the world\u2019s oil and liquefied natural gas supplies, has dwindled since Iran started attacking ships soon after the war erupted in late February.<\/p>\n
More vessels have gone through the chokepoint in past two weeks, some of them coordinating with the US military, Bloomberg reported. The numbers are still way down from pre-war levels.<\/p>\n
While Trump says Iran is desperate for a deal, the Islamic Republic has repeatedly pushed back against American demands and says it\u2019s prepared for a resumption of all-out war.<\/p>\n
US and Iranian negotiators are grappling with several critical questions beyond Lebanon, including whether Tehran will allow free passage for ships under an interim accord, which the sides are describing as a memorandum of understanding.<\/p>\n
Iran also wants billions of dollars of funds stuck in countries such as Qatar to be unfrozen and is resisting US pressure to destroy or send to a country like China its stocks of highly-enriched uranium.<\/p>\n
Here\u2019s more on the Iran war:<\/p>\n
The risk that Iran is covertly pursuing nuclear weapons is higher today than before the US and Israel launched their first military attacks on the Islamic Republic a year ago, western officials said, citing data circulated by the UN\u2019s atomic watchdog.<\/p>\n
The Trump administration sanctioned Iran\u2019s biggest cryptocurrency exchange and three other entities in a continued effort to pressure the Islamic Republic into a deal.<\/p>\n
Some Greek oil tanker owners are moving their ships closer to the Persian Gulf, in a bet that the vessels will soon be able to earn sky-high rates if the Strait of Hormuz reopens.<\/p>\n
–With assistance from Derek Wallbank, Michelle Jamrisko, Nick Wadhams, Anand Krishnamoorthy and Magdalena Del Valle.<\/p>\n
(Adds market update, Rubio comments from third paragraph)<\/p>\n
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