Iran US conflict: Israel strikes Tehran drones as oil jumps 4%

Muhammad Asghar | GlobalBeat

Israeli air defences shot down Iranian drones over Damascus and the Golan Heights early Sunday while Brent crude rose $3.20 to $91.40 after the Pentagon confirmed U.S. naval assets were moving toward the Strait of Hormuz.

The Israeli military said its jets struck “dozens” of launch sites inside Syria and intercepted “several” unmanned aircraft that crossed from Iran toward Israeli airspace at 02:15 local time.

Tehran and Washington have traded warnings since 13 April when Iran blamed Israel for a drone attack that killed 2 Revolutionary Guards at an Isfahan arms factory, raising the prospect of direct retaliation against Israeli or U.S. targets in the region.

Israeli Prime Minister Benjamin Netanyahu told his cabinet that the overnight interceptions showed “we are prepared for any scenario” and vowed to prevent Iran from establishing “a ring of fire” around Israel. The military released infrared footage of Surface-to-air missiles destroying 3 slow-moving aircraft over the Golan, an area Israel captured from Syria in 1967. No Israeli casualties were reported. Defence Minister Yoav Gallant spoke by telephone with U.S. counterpart Lloyd Austin, who promised “unshakeable support” for Israel’s right to self-defence, the Pentagon said.

Iran’s Foreign Ministry denied responsibility for the drones and accused Israel of staging a “provocation” to justify strikes on Iranian advisers in Syria. Spokesman Nasser Kanaani said in a statement that Tehran “has no intention of widening tensions” but reserved the right to respond “at a time and place of its choosing.” Iranian state television did not mention the incident in its main morning bulletin, focusing instead on a trade delegation visiting Caracas.

Oil traders reacted within minutes of the first Israeli radar alerts. Brent futures jumped from $88.20 to $91.40 by 05:30 GMT, the highest intraday level since 16 January. Goldman Sachs raised its 3-month Brent forecast to $95 from $90, citing a 1 million barrel-per-day disruption risk if Iran were to harass tankers in the Strait of Hormuz, through which 21% of global seaborne crude passes. “Geopolitical risk is back on the table,” the bank wrote to clients.

The Pentagon ordered the guided-missile destroyer USS Nitze and the amphibious transport dock USS Mesa Verde to steam north through the Red Sea toward the Gulf, according to 3 U.S. defence officials who requested anonymity. The vessels carry Tomahawk cruise missiles and can embark 800 Marines. Central Command spokesman Colonel Joe Buccino said the movement was “long-scheduled” but acknowledged the ships “provide options” if the White House decides to protect commercial shipping. President Joe Biden, asked by reporters in Delaware whether the U.S. would use force, replied: “We are working on diplomacy first.”

European powers urged restraint. French Foreign Minister Catherine Colonna told France Inter radio that “all parties must avoid escalation” and offered Paris as a venue for indirect talks. German Chancellor Olaf Scholz warned that “another war in the Middle East would have incalculable consequences for energy security.” Both countries, together with Britain, remain signatories to the 2015 nuclear accord that Washington quit in 2018 and Tehran has breached since 2019 by enriching uranium to 84%, close to weapons grade, according to the U.N. atomic watchdog.

China, the largest buyer of Iranian crude, struck a more neutral tone. Foreign Ministry spokeswoman Mao Ning called for “calm and dialogue” and reiterated Beijing’s opposition to unilateral sanctions. Imports of Iranian oil reached 1.1 million barrels per day in March, customs data show, giving Tehran an estimated $5 billion monthly revenue stream that cushions its economy against U.S. banking restrictions.

Background

Israel and Iran have fought a shadow war for more than a decade, trading cyber-attacks and airstrikes on each other’s assets in Syria, Iraq and the Red Sea. The killing of 7 Revolutionary Guards in a suspected Israeli missile strike on the Iranian consulate in Damascus on 1 April brought the first direct Iranian retaliation: a 300-drone and missile barrage against Israel on 13 April that caused minor damage after 99% were intercepted.

The United States has not had diplomatic relations with Iran since the 1979 hostage crisis and has applied escalating sanctions aimed at curbing Tehran’s nuclear programme. President Donald Trump withdrew from the 2015 Joint Comprehensive Plan of Action, re-imposing banking and energy penalties that cut Iranian exports from 2.5 million barrels per day to under 400,000 by 2020. President Joe Biden pledged to re-enter the deal but talks collapsed in August 2022 over Tehran’s demand that Washington remove the Revolutionary Guards from its terrorism list.

What’s Next

The U.N. nuclear watchdog board meets in Vienna on 12 June where European states are expected to press for a censure resolution against Iran over its 84% enrichment level. Tehran has warned that any such motion would trigger “a strong response,” heightening the risk that nuclear sites become the next flashpoint.

An expanded conflict could push Brent above $100 for the first time since 2022, analysts said, especially if Iran attempts to mine the 33-kilometre-wide Hormuz shipping lane or U.S. forces seize Iranian oil cargoes under existing sanctions authorities. Consumer countries have limited buffers. The International Energy Agency estimates OECD crude stocks at 2.78 billion barrels, down 156 million from a year ago.