Tensions in the Middle East intensified on Wednesday as Iran’s Revolutionary Guards seized two vessels in the Strait of Hormuz whilst the United States blocked nearly $500 million in cash destined for Iraq, in moves that threaten fragile ceasefire arrangements in the region.

Iran’s Revolutionary Guards said their naval forces stopped two ships attempting to pass through the Strait of Hormuz and directed them to Iranian territorial waters. Tehran has said vessels must seek permission to leave or enter the Gulf through the strait, a route that in peacetime accounts for a fifth of the world’s oil and gas exports along with other vital commodities.

Iranian forces fire on cargo vessels

The developments came as separate incidents saw Iranian forces fire upon vessels in the region. A cargo ship leaving Iran was fired upon and stopped in the water, according to the United Kingdom Maritime Trade Operations centre. The crew were reported safe with no damage to the vessel. Meanwhile, an Iranian gunboat fired at a container ship off the coast of Oman, causing damage to the vessel’s bridge but no casualties, the UKMTO said.

The United States has piled pressure on Baghdad to fight Iran-backed militant groups by blocking a plane carrying the cash to Iraq, US media reported. The Wall Street Journal reported that Washington has suspended cash shipments to Iraq and frozen funding for security programmes following attacks on US interests in the country by groups showing solidarity with Iran.

Oil markets responded to the escalating tensions, with prices edging higher on Wednesday whilst Europe’s main stock markets eased on uncertainty surrounding the prospect of resumed Middle East peace talks following an extension to the US-Iran ceasefire. Brent North Sea crude was again closing on $100 a barrel whilst the main US contract, West Texas Intermediate, traded back above $90. Both main oil contracts had risen around 3% on Tuesday.

Israeli strike kills one in Lebanon despite truce

In Lebanon, an Israeli strike on the Bekaa region killed one person and wounded two others despite a truce between Israel and Hezbollah, Lebanese state media reported. Hezbollah on Tuesday said it had launched rockets and attack drones at a site in northern Israel in response to “blatant” Israeli ceasefire violations, which it said included “attacks on civilians and the destruction of their homes and villages”.

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Ahead of renewed talks between Israel and Lebanon in Washington, Israel’s foreign minister Gideon Saar urged Beirut to make joint efforts to counter Hezbollah. “Let’s work together against the terror state that Hezbollah built in your territory,” Saar said in a speech to diplomats on Wednesday. “This cooperation is needed by you even more than by us. It requires moral clarity and the courage to take risks. But there is no real alternative for ensuring a future of peace for you and for us.”

International warnings on ‘critical juncture’

China warned that the Middle East conflict was at a “critical juncture” after President Trump extended a ceasefire to allow Iran more time to negotiate. “The current regional situation stands at a critical juncture transitioning between war to peace; the paramount priority remains to make every effort to prevent a resumption of hostilities,” Chinese foreign ministry spokesman Guo Jiakun told a news briefing.

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President Trump said Iran wanted the Strait of Hormuz open “so they can make $500 million a day”, which he said the Gulf nation would risk losing if it remains closed. Trump insisted in a Truth Social post on Tuesday that keeping a US blockade of the strait was vital for forging a deal with Iran.

“People approached me four days ago, saying, ‘Sir, Iran wants to open up the Strait, immediately.’ But if we do that, there can never be a Deal with Iran, unless we blow up the rest of their Country, their leaders included,” Trump said in the post.

ALSO READ: MIDDLE EAST WAR | Trump extends ceasefire to give Iran time to negotiate