TEL AVIV/WASHINGTON (Reuters) – Iran attacked and set ablaze a fully loaded crude oil tanker off Dubai on Monday, as President Donald Trump warned the US would obliterate Iran's energy plants and oil wells if it does not open the Strait of Hormuz.
The apparent strike on the Kuwait-flagged Al-Salmi is the latest in a string of assaults on merchant vessels by missiles or explosive air and sea drones in the Gulf and Strait of Hormuz since the US and Israel attacked Iran on February 28.
The month-long conflict has spread across the Middle East, killing thousands, disrupting energy supplies and threatening to send the global economy into a tailspin.
Crude oil prices briefly spiked anew after Kuwait's state news agency reported the attack on the tanker, which can carry around 2 million barrels of oil worth more than $200 million at current prices.
Kuwait Petroleum Corp, the ship's owner, said work was underway to assess damage and warned of a possible oil spill.
Authorities in Dubai later said they had been able to bring the fire under control following a drone attack on the tanker. No injuries have been reported, they said.
The jump in oil and fuel prices has started to weigh on US household finances and become a political headache for Trump and his Republican Party ahead of the November midterm elections, having vowed to lower energy prices and ramp up US oil and gas production.
The US national average retail price of gasoline crossed $4 a gallon for the first time in more than three years on Monday, data from price-tracking service GasBuddy showed, as tightening global supplies push US crude prices above $101 a barrel.
TROOPS DEPLOY AS TALKS CONTINUE
Attacks by both sides is showing no signs of easing, with fears of a wider conflict growing.
Iran-aligned Houthis entered the war by firing missiles and drones at Israel in recent days and Turkey reported a ballistic missile launched from Iran had entered Turkish airspace before being shot down by NATO air and missile defenses.
Israel carried out missile strikes on what it called military infrastructure in Tehran and infrastructure used by Iran-backed Hezbollah in Beirut, leaving black smoke hanging over the Lebanese capital.
Three United Nations peacekeepers from Indonesia were killed in two separate incidents in southern Lebanon.
Thousands of soldiers from the US Army's elite 82nd Airborne Division have started arriving in the Middle East, two US officials told Reuters on Monday, part of a reinforcement that would expand Trump's options to include the deployment of forces inside Iranian territory, even as he pursues talks with Tehran.
White House press secretary Karoline Leavitt later said Trump wanted to reach a deal with Tehran before an April 6 deadline he set last week after extending an earlier deadline he had set for Iran to open the Strait of Hormuz, a narrow waterway that normally carries about a fifth of global oil and liquefied natural gas supplies.
Leavitt said talks with Iran were progressing, adding that what Tehran says publicly differs from what it tells U.S. officials in private.
The Wall Street Journal later reported Trump had told aides he is willing to end the military campaign against Iran even if the strait remains largely closed and leave a complex operation to reopen it for a later date.
Iran said earlier on Monday it had received U.S. peace proposals via intermediaries, following talks on Sunday between the foreign ministers of Pakistan, Egypt, Saudi Arabia and Turkey.
Iranian Foreign Ministry spokesperson Esmaeil Baghaei said the proposals were "unrealistic, illogical and excessive".
"Our position is clear. We are under military aggression. Therefore, all our efforts and strength are focused on defending ourselves," he told a press conference.
Soon after Baghaei's remarks, Trump said the U.S. was in talks with a "more reasonable regime" to end the war in Iran, but also issued a new warning over the Strait of Hormuz.
"Great progress has been made but, if for any reason a deal is not shortly reached, which it probably will be, and if the Hormuz Strait is not immediately 'Open for Business,' we will conclude our lovely 'stay' in Iran by blowing up and completely obliterating all of their Electric Generating Plants, Oil Wells and Kharg Island," Trump wrote in a social media post, also threatening to attack Iranian desalination plants.
The White House said Trump was considering asking Arab nations to pay for the cost of the war. "It's an idea that I know that he has and something that I think you'll hear more from him on," Leavitt said in response to a reporter's question about the idea.
His administration requested an additional $200 billion in funding for the war. The request faces stiff opposition in the US Congress which must approve new spending.