Iran Issues Warning of Prolonged Conflict That Could Devastate Global Economy

Ali Fadavi, advisor to the Revolutionary Guards’ commander-in-chief in Iran, declared on Wednesday that the country is prepared for a prolonged war of attrition that would have a devastating impact on the global economy, following the firing on two commercial ships and the threat of targeting vessels from the US or its allies.

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As Tehran strengthened its grip on the Strait of Hormuz, a crucial passage for the global oil trade, US President Donald Trump stated that the war would soon come to an end, citing that there were limited targets left for US forces to strike in Iran.

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Oil prices have been rising steadily since February 28, when the US and Israel launched an attack on Iran, resulting in the death of the country's supreme leader and plunging the Middle East into war.

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In an effort to mitigate the surge in oil prices, the International Energy Agency announced that its member countries would release 400 million barrels of oil from their reserves, marking the largest such release to date.

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Now in its 12th day, the conflict has prompted Iran's Revolutionary Guard to vow to target "economic centres and banks" linked to US and Israeli interests, leading to the evacuation of employees from international firms in Dubai.

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The Strait of Hormuz, through which 20 percent of global crude and LNG passes, remains a focal point, with Ali Fadavi warning that the US and Israel must consider the possibility of a long-term war of attrition that could destroy the entire American economy and the world economy.

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Iran claimed to have struck the Liberian-flagged container ship Express Rome and the Thai bulk carrier Mayuree Naree, citing that they had entered the strait despite warnings from IRGC naval forces.

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Oman's navy rescued 20 crew members, while efforts are ongoing to locate three more, and pictures shared by the Thai navy showed black smoke billowing from the vessel.

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Analysts warn that a prolonged closure of the strait, which also transports a third of the world's fertiliser, would have a catastrophic impact on the global economy, particularly in Asia and Europe.

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French President Emmanuel Macron urged G7 leaders to take action to restore navigation in the strait "as soon as possible", while the UN requested that all parties allow humanitarian cargo to transit.

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Iran has exacerbated the economic fallout by targeting US allies in the Gulf, with drones falling near Dubai airport on Wednesday, injuring four people, according to the city's government.

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US financial service group Citi and British consulting group Deloitte have instructed employees to evacuate their offices in Dubai, sources told AFP, while drones also hit fuel tanks at Oman's Salalah port, according to the Oman News Agency.

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Private maritime security company Vanguard Tech reported the suspension of the port's operations following the attack on its southern section.

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The economic impact is mounting pressure on Trump, who faces accusations that the White House launched the war without preparing for its consequences, with Trump stating "any time I want it to end, it will end" in an interview with Axios.

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In Israel, Defence Minister Israel Katz said the operation would continue without a time limit, "as long as necessary", as Israel launched a new wave of strikes across Iran and against Hezbollah targets in Lebanon's capital Beirut.

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Israeli strikes hit an apartment building in central Beirut, the second targeting of the heart of the capital since the Middle East war began, with AFPTV capturing the sound of an air strike followed by a fireball erupting in a multi-storey residential building.

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An AFP correspondent observed destroyed walls in the building's seventh and eighth floors, with damaged cars nearby and security forces present at the scene, where a resident described hiding with his family as the strike hit.

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The Israeli-US attacks came weeks after Iranian authorities crushed mass protests, although the US and Israel claim they are not seeking to topple the Islamic republic, with Iranian authorities warning against dissent at home.

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Iran's police chief, Ahmad-Reza Radan, stated that protesters would be viewed and dealt with as "enemies", with all forces "ready, with their hands on the trigger, prepared to defend their revolution".

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In Iran, ordinary people are adapting to life under frequent US-Israeli strikes, with a 70-year-old Tehran resident, Mahvash, telling AFP journalists in Paris that "we've put our faith in God" and "people are calm" and "getting used to living despite everything".

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The US and Israel launched the war with an attack that killed Iran's supreme leader, Ayatollah Ali Khamenei, with his son Mojtaba Khamenei named as his successor, although he has yet to appear in public amid reports that he was wounded in the same strike.

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Tehran's ambassador to Cyprus, Alireza Salarian, confirmed that Mojtaba Khamenei was injured in the strike that killed his father, while Iran's health ministry reported on March 8 that over 1,200 people had been killed and more than 10,000 civilians injured in US and Israeli strikes.