US, Iran Expand Conflict to Infrastructure as Oil Markets Brace for Broader War

WASHINGTON/DUBAI — The United States and Iran escalated their conflict into a new phase this week, trading direct strikes on civilian and energy infrastructure as a fragile ceasefire collapsed and global oil markets priced in a prolonged disruption to Gulf energy supplies.

The U.S. military struck at least five bridges and a railway station in southern Iran, according to Iranian state media, along with an airport in Iranshahr near the Pakistani border. Seven people were reported killed in attacks on bridges in the southern port of Bandar Khamir, where the train station was also hit. The U.S. Central Command said its latest strikes targeted "military logistics infrastructure," the first time it has specifically cited infrastructure among its targets in more than a week.

Iran retaliated by hitting a power generation and water desalination station in Kuwait, causing damage, a fire and the disruption of a large number of electricity generation units, according to Kuwait's Ministry of Electricity, Water and Renewable Energy. Firefighters brought the blaze under control and technical teams began assessing the damage.

Iran also announced strikes on U.S. bases in Kuwait, Qatar and Bahrain, as well as a U.S. radar station in Oman. Explosions were heard in the Qatari capital Doha, where the interior ministry said a child was wounded by shrapnel. Iran also fired at Syria, apparently for the first time in the war, targeting what it described as a U.S. special forces base in Tanf, according to reporting by the Honolulu Star-Advertiser. A Syrian military source said the strike hit near the base and caused no damage or casualties.

The infrastructure strikes mark a significant broadening of the conflict. When Iran hit a Kuwaiti desalination plant on March 30, it was seen as a major escalation that helped push the United States to declare the war's first ceasefire a week later. The Gulf states depend on such plants for both electricity and fresh water.

Ceasefire Collapses, Strait Closed

The interim ceasefire agreement that halted hostilities last month collapsed on July 7, when Iran struck ships in the Strait of Hormuz and the United States responded with air strikes, according to multiple sources. Iran has since announced the closure of the strait, and Washington reimposed a blockade of Iranian ports.

Iran formally suspended its Memorandum of Understanding with the United States, according to reports from Tasnim news agency. Kazem Gharibabadi, Iran's deputy foreign minister and head of the Iranian technical negotiating team, said the U.S. had violated all its commitments and that Iran was no longer implementing its own commitments, as reported by Al Jazeera.

At sea, the U.S. military said it boarded a tanker to enforce the blockade, releasing photos of Marines rappelling from a helicopter onto the deck where one posed in front of an Iranian flag. Iran's semi-official Tasnim news agency reported that the Revolutionary Guards navy had "targeted" a Thai-flagged ship trying to transit the Strait of Hormuz. Shipping traffic has been significantly reduced across the waterway amid threats from sea mines, missiles and drones.

Beyond the Gulf, armed assailants boarded and seized a small chemical tanker off Yemen in the Gulf of Aden, close to the mouth of the Red Sea, raising further concern about security at another key chokepoint for oil shipments.

Oil Markets React

Benchmark Brent crude oil prices climbed 3% on Friday and were on track for a third consecutive weekly gain. West Texas Intermediate crude for August delivery rose $3.65, or 4.62%, to $82.60 per barrel, according to Nasdaq reporting. Global share prices fell, with Wall Street opening sharply lower before leveling off.

Supply concerns dominate as the Strait of Hormuz remains shut, blocking vessel movements and crippling oil and energy trade across the Arabian Gulf. The International Energy Agency has estimated global crude oil demand will fall by nearly 1 million barrels per day year-on-year in 2026, according to a recent report cited in Nasdaq's coverage.

Warnings and Threats

The U.S. State Department issued a "worldwide caution," warning that "due to heightened tensions in the Middle East, the security environment remains complex, with the potential for unforeseen escalation."

CENTCOM said two U.S. service members were killed in an Iranian ballistic missile attack on Jordan's Muwaffaq Salti Air Base, and one service member is currently missing in action. Four other American service members were medically evacuated to Jordanian hospitals and have since been discharged. The incident raises the number of U.S. service members killed in the war to 16.

President Donald Trump has threatened to launch broad-based air strikes on Iran's infrastructure and has declined to rule out a ground assault on Iran's coast or islands, according to reporting from Reuters and the Honolulu Star-Advertiser. U.S. officials said attacks on southern Iran are designed in part to give Trump options.

Mohsen Rezaei, an adviser to Iran's supreme leader and a former Revolutionary Guards top commander, warned on Friday: "If U.S. strikes continue for several more days, we will move into a phase of full-scale offensive operations."

Iran has signaled it could prod its Houthi allies in Yemen to close the Bab al-Mandeb strait at the mouth of the Red Sea, potentially cutting off the main alternative route for Middle East oil bypassing the Gulf. Sources told Reuters Iran has already instructed the Houthis to act if Washington attacks Iran's infrastructure.

U.N. Secretary-General Antonio Guterres expressed concern about the escalation, particularly over "attacks on civilian infrastructure in Iran and across the region," his spokesperson said.

Diplomatic Signals Persist

Despite the escalating violence, both sides have left the door open to negotiations. The White House said Trump was open to diplomacy, and White House spokesperson Karoline Leavitt acknowledged the U.S. is in talks with Iran. Iran's Parliamentary Speaker Mohammad Bagher Ghalibaf stated that "doors are open for talks," asserting that negotiations at this stage does not mean capitulation, according to Nasdaq reporting.

Trump said at the White House that the U.S. is "winning big" in Iran and that results will be seen shortly.