US President Donald Trump pushed concerns about surging world prices aside Monday and threatened to destroy Iran's oil wells, power plants and main export terminal if Tehran does not quickly accept a peace deal.
An earlier Trump comment warning of a possible assault by US ground troops to seize Iran's Kharg Island oil facilities had already sent prices higher, but the US leader then doubled down in a combative social media post.
Trump expressed confidence that a negotiated settlement would soon be reached but warned that if it was not -- or if Iran continued to block the Strait of Hormuz to most sea traffic -- US forces would "blow up" Kharg Island and all of Iran's oil wells and electricity generation.
Iran has previously threatened that if its key economic sites face further US and Israeli strikes it will target the energy infrastructure of its oil and gas-rich Arab neighbours on the Gulf, and the month-old war has already inflicted havoc on the global economy and plunged markets into turmoil.
Market experts warned that any US ground operation or wider Iranian retaliation could send oil prices to levels not seen since the July 2008 commodity boom, when the cost of world benchmark crude Brent hit close to $150 per barrel -- and could rise far more.
Brent has already risen in price by nearly 60 percent this month, and the US benchmark WTI by more than half.
"If the US were to launch a ground invasion of Iran, possibly taking the Kharg Island, or if Tehran were to intensify retaliatory strikes on energy infrastructure or fully close the Strait, projections of $200 (a barrel) oil will not be an otherworldly supposition anymore," analyst Tamas Varga of PVM Energy said.
As Israel pressed its offensive against Iran-backed Hezbollah in south Lebanon -- hitting, an official told AFP, an army checkpoint and killing a Lebanese soldier -- Indonesia confirmed on Monday that one of its peacekeepers was killed after the UN force said a projectile hit one of its positions.
Separately, the Israeli military said one of its soldiers was killed on Sunday in combat in southern Lebanon, bringing to six the number of troops killed since fighting with Hezbollah began this month.
- Diplomatic efforts -
On the ground there appeared to be no let-up in hostilities. Israel said its air defence batteries responded to "missiles launched from Iran", after earlier announcing it was striking "terror regime military infrastructure across Tehran".
Israel confirmed that in recent days it had hit the Imam Hossein University in Tehran, which it says is used by Iran's Islamic Revolutionary Guards Corps (IRGC) for advanced weapons research. Tehran has warned it could strike US universities across the Middle East.
On the diplomatic front, Pakistan -- acting as a go-between for Washington and Tehran -- hosted foreign ministers from Saudi Arabia, Turkey and Egypt in Islamabad on Sunday for talks on the crisis.
Pakistan's Foreign Minister Ishaq Dar said they had discussed how to "bring an early and permanent end to the war."
He said Iran and the United States had expressed "confidence in Pakistan to facilitate the talks" and that he had spoken to his Chinese counterpart Wang Yi as well as UN Secretary-General Antonio Guterres and other foreign ministers who also backed the idea.
Nevertheless, the speaker of Iran's parliament accused Washington of using diplomacy as a smoke screen.
Despite making diplomatic overtures, including proposing a 15-point plan to end the war, the United States has also been sending more military assets into the region, including an amphibious assault ship carrying 3,500 Marines.
- Sleepless nights -
The weeks of strikes have also taken a heavy toll on ordinary people in Iran.
"I miss a peaceful night's sleep," an artist in Tehran told AFP, saying night-time strikes were "so intense it felt like all of Tehran was shaking".
The war has escalated into a regional conflagration as Tehran retaliates with attacks on Gulf states and virtually seals the critical Strait of Hormuz oil shipping lane.
Iran says it has closed the Strait of Hormuz, which previously accounted for a quarter of the world's seaborne oil trade and a fifth of liquefied natural gas shipments, to vessels from hostile nations.
