U.S. President Donald Trump said he is considering a “massive attack” on Iran as a means of pressuring Tehran to negotiate a peace agreement, a move that has heightened concerns over further disruptions to energy markets and the prospect of rising global oil prices.
Trump told Axios in an interview that he was "close to making a decision" on attacks that would be "bigger than ever before." Iran isn't ready to make a deal and "they haven't received enough pain yet," Trump was reported as saying.
The president's remarks underscore the bind he finds himself in after renewed fighting caused an interim peace deal to collapse and all but closed the Strait of Hormuz. In a Truth Social post Thursday, Trump threatened "major military punishment" on Iran and the Houthi militant group it backs in Yemen if they target commercial ships. The Houthis claimed strikes on Saudi oil tankers this week, opening a new front in a conflict that has driven oil prices above $100 a barrel and US retail gasoline prices over $4 a gallon.
Mediation efforts faltered after Iran on Thursday rejected a ceasefire proposal from Trump carried to Tehran by Iraq's prime minister, the New York Times reported, citing Iranian and Iraqi officials. Details of the plan were not clear, the newspaper said.
US Central Command said Thursday it launched a 13th consecutive night of strikes intended to degrade Iran's ability to attack commercial shipping in Hormuz.
The strikes came hours after the US president warned "that from this point forth, any and all damages done to Ships, Cargo, or anything related thereto, will be paid for by Iranian Money that the United States has in its possession, and controls."
The US has about $2 billion of blocked Iranian funds inside its borders. A much larger portion is in other countries and is prevented from being transferred by US sanctions — estimates vary from $24 billion to more than $100 billion. Iranian Foreign Minister Abbas Araghchi said in a post on X that "seizing another nation's assets to pay for unrelated future claims is an incendiary precedent."
The war that began when the US and Israel attacked Iran in February has entered a new phase of escalation after last month's truce collapsed. The fighting remains less intense than at its peak, but Iran has threatened to target regional infrastructure, including energy sites, if Trump carries out his threat to destroy one bridge or power plant each time Tehran attacks shipping in Hormuz. Traffic through the strait, which before the war carried about one-fifth of global energy supplies, has slowed to a trickle.
The Houthis' actions this week threaten another maritime chokepoint, with some vessels already avoiding the Bab el-Mandeb Strait. Still, two China-owned oil tankers loaded with Saudi crude have exited the Red Sea via the strait.
Brent crude was trading at $100.30 a barrel as of 6:11 a.m. in London on Friday, compared with as low as $70.14 on July 2. Gold extended its drop to $4,030.10 an ounce on expectations that the US Federal Reserve may tighten monetary policy to contain inflation.
Trump last month cited the risk of a global economic crash as a key reason for him agreeing to a truce. He faces growing political pressure before November's midterm elections, with Republicans struggling to retain control of Congress. Polls show the war isn't popular. The House of Representatives on Thursday passed its second resolution calling on Trump to stop the war, although the measure is largely symbolic.
Iranian state TV reported a strike on the passenger terminal at the Shalamcheh border crossing with Iraq that killed two people, while Iran has continued attacks on US bases in the region, including in Kuwait and Jordan.
The Houthis, part of Tehran's so-called Axis of Resistance, control much of northern Yemen, including Sanaa and the Red Sea port of Hodeida. They have repeatedly disrupted Red Sea shipping since 2023 with drone and missile attacks launched after Israel's war against Hamas began in Gaza. Trump ordered airstrikes against the group last year before ending the campaign after a partial truce.
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