War expands as Iran-backed Houthis attack Saudi cities and US strikes Iranian tankers

The wider war in the Gulf has turned into a test of wills between the U.S. and Iran, with each side hoping that economic pressure from competing blockades will force the other to yield. The U.S. Treasury announced new aviation-related sanctions on Tuesday it said were aimed at grounding Iran's airlines. Washington is trying to increase the flow of oil to world markets by guiding ships through the Strait of Hormuz, while cutting off Iran's exports with a blockade. Tehran has announced new measures to seal off the strait, saying it will soon unveil details of a "maritime exclusion zone" that will extend from the perimeter of the U.S. blockade, through the strait and into the Gulf itself. Despite U.S. strikes that have degraded Iran's conventional forces and punished its economy, Iran's missiles and drones can still reach U.S. military bases in the region and hit ships in the strait. The fighting has caused global shortages of crude oil and the fuels produced by refining it. Diesel fuel in the United States is now at a record average retail price, hurting the political prospects of President Donald Trump's Republicans ahead of November congressional elections. Meanwhile, U.S. forces struck multiple Iranian tankers tied to the Islamic Revolutionary Guard Corps in response to Iranian attempts to hit a U.S. Navy warship, a U.S. official said, marking a resumption of U.S. attacks on Iran after a two-day pause. Iranian media reported multiple attacks, with the Tasnim news agency saying a U.S. missile struck an Iranian tanker 4 miles (6 km) from the oil hub of Kharg Island, and the state broadcaster reporting that the U.S. attacked a second oil tanker near the waters of Jask on the Gulf of Oman. The IRGC threatened to target oil tankers in Kuwaiti and Bahraini ports in response, warning crews there to evacuate, according to a statement carried by state media. Washington fired at Iranian tankers over the weekend in retaliation for Iranian fire at U.S. warships, in which Iran said it had used new, more capable ballistic missiles. Iran's Revolutionary Guards said they had captured a U.S. submersible near the strait. A U.S. official told Reuters on Tuesday that an underwater military drone malfunctioned more than a day ago, adding it did not have classified sonar or radar equipment on board. After a month of calm in August, fighting in the Gulf has resumed, with Iran and the U.S. exchanging fire, sending global oil prices back towards the $100 a barrel level passed at the war's peak. Prices for benchmark Brent crude LCOc1 and U.S. West Texas Intermediate CLc1 closed at their highest levels since July 23 and June 4, respectively. Houthi attacks on southwestern Saudi Arabia have the potential to worsen the war's global economic impact by disrupting Middle East energy supplies beyond the blockaded Strait of Hormuz. Saudi Arabia has led an Arab coalition battling against the Houthis in Yemen for more than a decade. That war had calmed in recent years, but a ceasefire there has broken down, with the Houthis threatening shipping at the mouth of the Red Sea. In recent days, Saudi-backed Yemeni forces of a government based in the south have launched a multipronged offensive on Houthi-held areas, after the Houthis tried to advance on government-held positions. The government, which was driven by the Houthis from the capital 12 years ago, says it now aims to recapture all Houthi-held territory. Houthi spokesperson Yahya Saree accused Riyadh of having escalated the war by launching airstrikes on Yemen, and said the Houthis would respond. DUBAI/CAIRO, Sept 8 (Reuters) - Yemen's Tehran-backed Houthis attacked four cities in the south of U.S. ally Saudi Arabia on Tuesday, wounding more than 70 people and setting oil installations ablaze in what appeared to be a major expansion of the six-month-old [Middle East war](https://www.reuters.com/world/iran/). In Saudi Arabia, the Houthis, who control most of Yemen's populated areas including the capital, said they had launched a broad operation deep into Saudi territory. They used drones and missiles to strike a Saudi airbase in the southern city of Khamis Mushait as well as Saudi state oil company assets in the cities of Abha, Najran and Jazan. NASA satellite images showed a thick cloud of black smoke over the Jazan refinery and a column of white smoke rising from an oil distribution centre in Abha. Saudi authorities described blazes at the sites and said women and children were among the 73 people hurt. The reports of such large numbers of wounded suggested the attacks were among the biggest carried out against Saudi Arabia since the United States and Israel launched their war against Iran in February. No confirmed images from the ground of the attacked Saudi cities were available, and witnesses could not be reached in a country where media is tightly controlled.

War expands as Iran-backed Houthis attack Saudi cities and US strikes Iranian tankers

Wider Gulf tensions and sanctions

US strikes Iranian tankers after pause

Oil prices rise as fighting intensifies

Houthis attack Saudi cities and oil targets

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