Iran war enters fourth day in ‘smoke and blood’ as markets slide

DUBAI/TEL AVIV, March 3 (Reuters) – Explosions tore through Tehran and Beirut on Tuesday and financial markets around the world slid at the prospect of a prolonged disruption to global energy supplies from the U.S.-Israeli air war against Iran.

A day after President Donald Trump and Prime Minister Benjamin Netanyahu gave open-ended answers when asked how long the war would last, a source told Reuters that Israel’s campaign had been planned to last two weeks and was moving faster than ‌expected.

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The source, familiar with Israel’s war plan, said its aim was to overthrow Iran’s clerical rulers, and there was no firm deadline to achieve it.

But the Israeli military was going through its target list faster than planned, with early success killing Iran’s leaders and taking out its defences, the source said. Israel was also accelerating its campaign out of concern that Washington might agree with Iran’s surviving leaders to stop before Israel’s objectives were realised, the source added.

Inside Iran, Israel struck the Tehran headquarters of the state broadcaster IRIB. Residents have jammed highways to flee cities as the bombs have fallen.

“How long will this continue? Where are the shelters? Where is the government?” Bijan, 32, a bank employee, told Reuters by telephone from Tehran.

“Every night my wife and I hide in the basement. The whole city is empty. There is smoke and blood everywhere.”

The price of crude oil rose around 4% overnight. Europe’s benchmark STOXX 600 index (.STOXX), opens new tab ⁠fell 3% in early trading, after a 1.7% drop on Monday. A 2% fall in U.S. stock futures suggested the selloff might reach Wall Street later.

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The U.S.-Israeli campaign killed Iranian Supreme Leader Ayatollah Ali Khamenei on day one, in what may have been history’s first assassination of a national leader by enemy forces from the air. If it were to achieve the aim of overthrowing Iran’s ruling system using air power with no armed force on the ground, that would also be a first.

Iran has called the war an unprovoked attack, and responded by firing missiles and drones at neighbouring Arab states and strangling shipping through the Strait of Hormuz, where a fifth of the world’s oil and huge volumes of gas skirt its coastline.

Since Monday, the war has spread to Lebanon, where Iran’s Hezbollah allies fired on Israel, which responded with air strikes and reinforcements of ground positions in the south. Thick black smoke blanketed Beirut as the sound of explosions rumbled in the air. Authorities said dozens were killed there.

The U.S. ordered non-emergency government personnel and their families to leave the United Arab Emirates, Qatar, Kuwait, Bahrain, Iraq and Jordan. U.S. diplomatic missions in Saudi Arabia and Kuwait, hit by Iranian drones, were shut.

Graphic: A map of attacks and counterattacks

Iran said its death toll from the attacks had reached 787, citing the Red Crescent. State media showed hundreds packing the streets of the southern city of Minab to mourn scores of pupils killed in the bombing of a girls’ school on the war’s ‌first day, the ⁠worst of several reported attacks that have hit civilian targets.

Some Iranians have openly celebrated the death of Khamenei, 86, who had ruled Iran for 37 years and led security forces that killed thousands of anti-government protesters only weeks ago. But the relentless bombing has sown fear even among those hoping for change.

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While Israeli officials explicitly say they want to overthrow Iran’s government, U.S. officials have said the war’s aim is to destroy Iran’s ability to project force beyond its borders. But Trump has also urged Iranians to topple the clerical leadership, an enemy that has tormented the United States and its allies for generations.

Speaking to reporters on Capitol Hill on Monday, Secretary of State Marco Rubio said the U.S. attacked Iran after determining that Israel was on the verge of launching its own strike. ⁠Washington believed any Israeli attack would prompt Iran to retaliate against U.S. interests.

“We knew that if we didn’t preemptively go after them before they launched those attacks, we would suffer higher casualties,” Rubio said.

Netanyahu said on Monday the war was “not going to take years”. Trump suggested it could take four or five weeks. But both avoided giving any firm timeframe, leaving open the prospect of a broad, open-ended war.

Israeli Lieutenant Colonel Nadav Shoshani told an online briefing that the duration of the campaign could depend on developments, adding: “We have prepared a general scope of weeks.” Asked ⁠if Israel could deploy ground forces to Iran, Shoshani said that was unlikely.

In Israel, air raid sirens sounded repeatedly, warning of incoming attacks and sending millions into bomb shelters. In Tel Aviv, buildings shook as air defences intercepted incoming Iranian missiles.

The war has jeopardised global energy supplies, with Qatar, one of the world’s top exporters of liquefied natural gas, halting production, and tankers dropping anchor in the Gulf rather than brave the trip through the strait.

Early on Tuesday, two drones struck the U.S. embassy ⁠in Riyadh, causing minor damage and starting a fire, and at least eight more drones were intercepted before reaching the city, Saudi Arabia’s Defence Ministry said.

Global air transport has also been in chaos, with airports shut in the Middle East that serve as hubs linking Asia, Europe and Africa.