By Maayan Lubell, Alexander Cornwell and Idrees Ali
TEL AVIV/JERUSALEM/WASHINGTON, March 22 (Reuters) - U.S. President Donald Trump and Iran threatened to escalate their war by attacking energy facilities in the Gulf, a potential widening of hostilities that could deepen a regional crisis and add to concerns in global markets.
Air raid sirens sounded across Israel from the early hours of Sunday morning, warning of incoming missiles from Iran, after scores of people were hurt overnight in two separate attacks in the southern Israeli towns of Arad and Dimona.
The Israeli military said hours later that it was striking Tehran in response.
Trump on Saturday threatened to "obliterate" Iran's power plants if Tehran did not fully reopen the Strait of Hormuz within 48 hours, suggesting a significant escalation barely a day after he talked about "winding down" the war, now in its fourth week.
Iran said on Sunday it would attack U.S. infrastructure, including energy facilities in the Gulf, if Trump carried out his threat, which he made as U.S. Marines and heavy landing craft continued to head to the region.
Iran's Parliament Speaker Mohammad Baqer Qalibaf wrote on X that critical infrastructure and energy facilities in the Middle East could be "irreversibly destroyed" should Iranian power plants be attacked.
More than 2,000 people have been killed during the war the U.S. and Israel launched on February 28, which has upended markets, spiked fuel costs, fuelled global inflation fears and convulsed the postwar Western alliance.
ELEVATED UNCERTAINTY
"President Trump's threat has now placed a 48-hour ticking time bomb of elevated uncertainty over markets," said IG market analyst Tony Sycamore, who expects stock markets to fall on Monday as energy supplies remain strained.
Oil prices jumped on Friday, ending the day at their highest in nearly four years, after Iraq declared force majeure on all oilfields developed by foreign firms, Israel attacked a major gas field in Iran and Tehran responded with strikes on neighbours Saudi Arabia, Qatar and Kuwait.
Iranian attacks have effectively closed the Strait of Hormuz, a narrow choke point that carries around a fifth of global oil and liquefied natural gas supplies, causing the worst oil crisis since the 1970s. Its near-closure sent European gas prices surging as much as 35% last week.
"If Iran doesn't FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz, within 48 HOURS from this exact point in time, the United States of America will hit and obliterate their various POWER PLANTS, STARTING WITH THE BIGGEST ONE FIRST!" Trump posted on social media around 7:45 p.m. EDT (2345 GMT) on Saturday.
The Strait of Hormuz remains open to all shipping except vessels linked to "Iran's enemies", the country's representative to the International Maritime Organisation was quoted as saying in Iranian media reports published on Sunday.
Ali Mousavi was speaking earlier in the week to Chinese news agency Xinhua, before Trump's threat to attack Iranian power plants if the strait was not "fully open" within 48 hours. Mousavi said passage through the waterway was possible by coordinating security and safety arrangements with Tehran.
Ship-tracking data has shown some vessels, such as Indian-flagged ships and a Pakistani oil tanker, have negotiated safe passage through the strait. Pakistan has good ties with Iran while keeping close relations with the U.S. and Saudi Arabia.
Iran's Khatam al-Anbiya military command headquarters said on Sunday if the U.S. hit Iran's fuel and energy infrastructure, Iran would launch attacks on all U.S. energy, information technology and desalination infrastructure in the region.
The Islamic republic's power grid is deeply intertwined with its energy sector. Striking major plants could trigger blackouts, crippling everything from pumps and refineries to export terminals and military command centres.
While some Gulf desert states such as Saudi Arabia, Oman and the UAE have access to more than one sea to draw water from for desalination, Qatar, Bahrain and Kuwait are crowded along the shoreline of the Gulf with no other coastline.
IRAN EXPANDS RISKS WITH LONG-RANGE MISSILES
Tehran fired long-range missiles for the first time on Saturday, expanding the risk of attacks beyond the Middle East, while an Iranian strike landed near Israel's secretive nuclear reactor about 13 km (8 miles) southeast of the city of Dimona.
Iran fired two ballistic missiles with a range of 4,000 km (2,500 miles) at the U.S.-British Indian Ocean military base at Diego Garcia, said Israeli military chief Eyal Zamir.
The fighting in the Gulf has been taking place alongside a confrontation on a separate front between Israel and Lebanon's Hezbollah, backed by Iran, with the Israeli military saying on Sunday its troops had raided a number of the armed group's sites in southern Lebanon.
Hezbollah said it had attacked several border areas in northern Israel. Israeli emergency services said one person was killed in an Israeli kibbutz near the border, the first fatality in Israel killed by fire from Lebanon since escalation began.
Hezbollah has fired hundreds of rockets at Israel since it entered the regional war on March 2, prompting an Israeli offensive that has killed more than 1,000 people in Lebanon.
Israel said it had instructed the military to accelerate the demolition of Lebanese homes in "frontline villages" to end threats to Israeli communities, and to destroy all bridges over Lebanon's Litani river which it said were used for "terrorist activity".
Pope Leo appealed for an end to the conflict. "The death and suffering caused by this war are a scandal to the whole human family," he said.
A new Reuters/Ipsos poll, conducted last week, found 59% of Americans disapprove of U.S. military strikes against Iran, with 37% approving. The war has become a major political liability for Trump ahead of November elections for Congress.
(Reporting by Phil Stewart and Idrees Ali in Washington, Andrew Mills in Doha, Timour Azhari in Riyadh, Maayan Lubell in Jerusalem and Alexander Cornwell in Tel Aviv; Additional reporting by Reuters bureaus; Writing by Lisa Shumaker, Michael Perry, William Maclean; Editing by Alexander Smith,Christina Fincher and Hugh Lawson)
