Iran Threatens Oil Blockade Amid Escalating US-Israeli Strikes

Iran has warned that it will not allow any oil to be shipped from the Middle East if U.S. and Israeli attacks continue, escalating tensions in the region. The threat comes as President Donald Trump has threatened Tehran with 'death, fire, and fury' if Iran blocks oil exports through the Strait of Hormuz.

The heightened rhetoric did little to quell a sharp retreat in crude prices and a rally in global shares, which came after Trump expressed confidence in a swift end to hostilities. The conflict has led to significant fluctuations in global oil markets, with Brent crude futures falling more than 10% on Tuesday after soaring by as much as 29% on Monday.

At least 1,332 Iranian civilians have been killed and thousands wounded since the U.S. and Israel launched a barrage of air and missile strikes across Iran at the end of February. The war has effectively shut the Strait of Hormuz, leaving tankers unable to sail for more than a week and forcing producers to halt pumping as storage facilities fill.

Trump said on Monday that the U.S. had inflicted serious damage on Iran's military and predicted the conflict would end well before the initial four-week time frame he had laid out. However, he has not defined what victory would look like. Israel says its war aim is to overthrow Iran's system of clerical rule, while U.S. officials mainly say Washington's aim is to destroy Iran's missile capabilities and nuclear program.

Air strikes on Iranian oil facilities have caused unprecedented pollution in Tehran, with smoke plumes drifting across the city and leaving a strong smell of burning. Residents reported downpours of 'black rain' contaminated with pollutants from the damaged oil sites, according to reports by BBC. The World Health Organization (WHO) warned that attacks on oil facilities could pose serious health risks to residents, especially children, older people, and those with pre-existing medical conditions. The pollution is described as extreme and very different from typical urban smog.

The appointment of Mojtaba Khamenei as Iran's new supreme leader appeared to dash hopes of a swift end to the war, sending oil markets surging and share markets nosediving before swinging in the other direction when Trump predicted a quick end to the war. After speaking with Russian President Vladimir Putin, Trump said the U.S. would waive oil-related sanctions on 'some countries' to ease the shortage.

Despite the defiant rhetoric from both sides, investors placed strong bets on Tuesday that Trump would call off his war soon, before the unprecedented disruption it has caused to energy supplies causes a global economic meltdown. After Trump described the war on Monday as ahead of schedule, the bulk of an historic surge in crude oil prices the previous day was reversed. Asian and European share prices staged a recovery on Tuesday from earlier precipitous falls.

Iran has refused to bow to Trump's demand that it allow the U.S. to choose its new leadership, naming hardliner Mojtaba Khamenei as its new supreme leader to replace his father, who was killed on the war’s first day. A spokesperson for Iran’s Islamic Revolutionary Guard dismissed Trump’s remarks, saying Tehran would not allow 'one litre' of Middle Eastern oil to reach the U.S. or its allies while U.S. and Israeli attacks continue.

In a later Truth Social post, Trump repeated his warning: 'If Iran does anything that stops the flow of oil within the Strait of Hormuz, they will be hit by the United States of America TWENTY TIMES HARDER than they have been hit thus far.' Ending the war quickly and letting oil flows resume would appear to preclude toppling Iran’s leadership, which held large-scale rallies on Monday in support of the new supreme leader.

Many Iranians want change and some openly celebrated the death of the elder Khamenei, weeks after his security forces killed thousands of people to put down anti-government protests in Iran’s worst domestic unrest since the era of its 1979 revolution. There has been little sign of anti-government activity since then, with opponents of the authorities saying it would be unsafe to protest while Iran is under attack.

Despite Trump's repeated maximalist demands for a say in who runs Iran, U.S. administration officials have mostly said the war’s aim is to destroy Iran’s missile capabilities and nuclear programme. Israel has been bolder in openly proclaiming its wish to see Iran’s clerical rulers toppled.

Israeli strikes on fuel depots and petroleum logistic sites in Tehran saw apocalyptic images coming out of the Iranian capital, as spilled oil ignited rivers of fire, and thick black smoke blanketed the city. The attacks targeted four major storage facilities and a distribution centre, including the Tehran refinery in the south and depots in Aghdasieh, Shahran, and Karaj. Witnesses reported unrefined oil leaking directly into the streets as temperatures hovered around 13C (55F).

The medical and environmental fallout is immediate and severe. The Iranian Red Crescent Society warned that the smoke contains high concentrations of toxic hydrocarbons, sulphur, and nitrogen oxides. Any rainfall passing through these plumes becomes highly acidic, posing risks of skin burns and severe lung damage upon contact or inhalation.

Ali Jafarian, Iran’s deputy health minister, told Al Jazeera that this acid rain is already contaminating the soil and water supply. The toxic air poses a life-threatening risk to the elderly, children, and those with pre-existing respiratory conditions, prompting authorities to advise residents to remain indoors.

The destruction has also forced the Iranian Ministry of Petroleum to slash daily fuel rations for civilians from 30 litres (8 gallons) to 20 litres (5 gallons). At least four employees, including two tanker drivers, were killed in the depot strikes.