Donald Trump threatens further strikes on Iran; oil prices up by more than 2.5%

US-Iran war: US President Donald Trump threatened further strikes against Iran on Monday following a fresh exchange of attacks, causing oil prices to rise amid concerns over global supply disruption. Brent crude settled at $90.49 a barrel, up $2.39 or 2.71%, while US West Texas Intermediate crude rose $2.36 or 2.83% to $85.76. Brent touched $91.52 during the session, its highest since August 25.

The confrontation, now in its sixth month, had shifted recently into an economic stand-off involving sanctions, blockades and pressure on oil flows. The latest exchange demonstrated how quickly tensions can escalate into military action. Neither side appeared to seek full-scale war, but both indicated readiness to respond to further attacks.

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Iran fired missiles overnight at two US air bases in Jordan in response to a US strike on Iran's Larak Island. A US official said American forces targeted two Iranian launchers on Sunday after Revolutionary Guard forces were seen preparing to launch rockets with sea mines into the Strait of Hormuz. US Central Command described its action as "limited, precise" against minelaying forces posing an "imminent threat" in the strait.

Trump warned of more action, saying, "We're going to hit them hard" and that "there will be a response." He also stated the renewed strikes did not signal a return to full-scale war, describing Iran as a "failed nation" with a weakened economy and military. When asked about the use of nuclear weapons, Trump said there was "no reason" since Iran was "totally defeated militarily."

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A senior Iranian source called the overnight exchanges a "limited and contained confrontation" but warned of a harsh response if attacked again. Trump claimed US air defences intercepted all Iranian missiles that could have caused damage and said new US economic sanctions were impacting Iran significantly.

Earlier, Trump posted two videos on social media showing explosions at Iran's main oil export terminal, Kharg Island, but the videos were AI-generated and no such attack occurred. Iran dismissed the post as "laughable." Vice President JD Vance said Trump was "sending a message" by "switching it up on social media." Iran denied any attack on Kharg Island and confirmed oil operations were continuing.

Washington has avoided striking Iran's main oil and gas infrastructure, which Tehran has warned would provoke devastating attacks on Gulf neighbours. Instead, the U.S. has intensified secondary sanctions targeting countries buying Iranian oil.

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US Treasury Secretary Scott Bessent said Iran was "lashing out" due to the economic impact of sanctions. He indicated new secondary sanctions would be announced weekly, focusing initially on banks, aiming to bring Iran to the negotiating table.

Despite the tensions, Iranian President Masoud Pezeshkian said Tehran favoured a negotiated settlement, stating that continuing the war was not in the interest of Iran, the region or humanity. He made the remarks to Prime Minister Narendra Modi during a regional security meeting in Kyrgyzstan.