Iran warns of proportional retaliation as oil tops $94 on Hormuz threat

Iran will retaliate proportionally against any US strikes on its bridges or power plants, a military source said, as the two nations escalate threats over the Strait of Hormuz.

Iran warned it would strike back proportionally against any US attack on its civilian infrastructure, as President Donald Trump's threat to target bridges and power plants pushes the two nations closer to a direct confrontation over the Strait of Hormuz.

"An Iranian has a firm will in exercising its sovereignty over the Strait of Hormuz and will not allow this waterway to again become a tool of threat against Iran," an Iranian military source said Wednesday, according to local media.

The warning came after Trump said the US would destroy one bridge or power plant for each Iranian attack on ships in the strait, a chokepoint that handles about a fifth of the world's traded oil and gas. The US has completed 11 consecutive nights of strikes on Iran, with Defense Secretary Pete Hegseth estimating the war has cost $37.5 billion so far. Iran's Health Ministry reported 53 people killed and nearly 600 wounded from American strikes over the past 11 days.

The escalating rhetoric threatens to further disrupt global energy markets already reeling from the strait's effective closure. Benchmark Brent crude traded around $94 a barrel, and gasoline prices are climbing ahead of US midterm elections this fall. The last time a major chokepoint faced a sustained closure threat — the Strait of Malacca piracy surge in 2005 — shipping insurance premiums jumped more than 300 percent and crude prices added $8 a barrel within weeks.

Escalation Cycle Deepens

Iran's Islamic Revolutionary Guard Corps earlier claimed missile and drone strikes on three US air bases in Jordan — Muwaffaq Salti Air Base, King Faisal Air Base and Prince Hassan Air Base — in what it described as a direct response to American strikes. The IRGC warned it could carry out an operation that would result in a "national day of mourning" in the US if attacks continue. Neither the Pentagon nor Jordan has confirmed the Iranian claims.

The confrontation has drawn in neighboring states. Jordan's military said it intercepted four Iranian missiles over Aqaba and four drones, while missile alerts sounded in Bahrain and Saudi Arabia's eastern city of Dammam. Iran has so far avoided striking Israel directly, apparently seeking to prevent a broader regional war that could draw in additional adversaries.

Market Fallout Spreads Beyond Oil

The strait's disruption has sent shockwaves through global markets. The US re-imposed a blockade on Iranian ports in response to Tehran's attacks on shipping. Iran-backed Houthi rebels in Yemen have threatened to target Saudi vessels in the Red Sea, putting another critical trade chokepoint at risk.

Beyond crude, the conflict is driving demand for safe-haven assets. Gold has rallied as investors hedge against further escalation, while defense sector stocks have outperformed broader equity indexes. The VIX, Wall Street's fear gauge, has climbed as uncertainty over the war's trajectory and duration weighs on risk appetite. The US dollar index has strengthened on safe-haven flows, adding pressure on emerging-market currencies already strained by higher energy import costs.

Diplomatic efforts have shown little progress. Iranian Interior Minister Eskandar Momeni visited Pakistan, a key mediator, seeking to revive talks, but Trump said the US has "no interest in meeting." The president signaled US forces could soon target an under-construction Iranian nuclear site buried deep under a mountain at Natanz, known as Pickaxe Mountain, which has remained untouched through the current conflict. Iran has always insisted its nuclear program is peaceful, though it resumed enriching uranium to near weapons-grade levels after Trump withdrew from the 2015 nuclear deal during his first term.

With both sides dug in and no offramp in sight, the conflict threatens to inflict lasting damage on global trade routes and energy markets. The Strait of Hormuz's closure has already jolted the world economy, and any expansion of hostilities to the Red Sea or to Iran's nuclear infrastructure could push crude prices significantly higher, deepening inflationary pressures worldwide.

This article is for informational purposes only and does not constitute investment advice.