Iran fired at Israel and targets across the Middle East on Wednesday, demonstrating it can still fight back and disrupt energy supplies despite what the Pentagon has described as the most intense U.S.-Israeli strikes yet.
Oil prices that shot up earlier this week have eased and stock markets have rebounded, with investors betting for now that U.S. President Donald Trump will find a quick way to end the war he began alongside Israel nearly two weeks ago.
But so far there has been no let-up on the ground, or any sign that ships can safely sail through the Strait of Hormuz, where a fifth of the world's oil has been blockaded behind a narrow channel along the Iranian coast in the worst disruption to energy supplies since the oil shocks of the 1970s.
"Get ready for oil to be $200 a barrel, because the oil price depends on regional security which you have destabilised," Ebrahim Zolfaqari, spokesperson for Iran's military command, said in comments addressed to the United States.
After offices of a bank in Tehran were hit overnight, Zolfaqari also said Iran would respond with attacks on banks that do business with the United States or Israel. People across the Middle East should stay 1,000 metres from banks, he added.
In the latest public display of defiance, huge crowds of Iranians took to the streets on Wednesday for funerals for top commanders killed in airstrikes. They carried caskets and brandished flags and portraits of slain Supreme Leader Ayatollah Ali Khamenei and his son and successor, Mojtaba.
An Iranian official told Reuters that Mojtaba Khamenei had been lightly wounded early in the war, when airstrikes killed his father, mother, wife and a son. He has not appeared in public or issued any direct message since the war began.
A source also said Israel believed he had been lightly hurt.
The Iranian military said on Tuesday it had launched missiles at a U.S. base in northern Iraq, the U.S. naval headquarters for the Middle East in Bahrain, and at targets in central Israel. Explosions rang out in Bahrain, while in Dubai four people were wounded by two drones that crashed near the airport.
Bahrain's Civil Aviation Affairs said on Wednesday that several Gulf Air aircraft without passengers, and some cargo airplanes, were relocated to alternative airports to "ensure the continuity and efficiency of air operations" during the crisis.
In Tehran, residents said they were growing accustomed to nightly airstrikes that have sent hundreds of thousands of people fleeing to the countryside and contaminated the city with black rain from oil smoke.
"There were bombings last night but I did not get scared like before. Life goes on," Farshid, 52, told Reuters by phone.
