Iran has rejected an Iraq-led ceasefire offer brought to Tehran by his country's prime minister, Iranian and Iraqi officials quoted by The New York Times said, worsening a standoff with the U.S. that threatens to shake energy markets across the globe. It arrived on the same day that the U.S. military launched its 13th consecutive night of attacks against Iranian territory and with a straight shot threat from Iranian authorities to involve Israel directly in the conflict for the first time in weeks.

Iraqi Prime Minister Ali al-Zaidi arrived in Tehran with a proposal the PM had worked out shortly after the two leaders met in the White House earlier this month. He met the Iranian foreign minister Abbas Araghchi and the Iranian chief negotiator Mohammad Bagher Ghalibaf as well as President Masoud Pezeshkian. Iranian officials denied American journalists they had any interest in a “temporary arrangement,” a halt to fighting without a resolution to the question of who will control the Strait of Hormuz, the narrow passage in the Persian Gulf through which about a quarter to one-fifth of the world's seaborne crude flows. But the visit was packaged differently by Al-Zaidi's own office, which saw it as a peace mission, promising that the Iraqi land would not be utilized for a strike on its neighbour, a promise directed not only at Tehran but also at Washington.

Araghchi was forthright, branding the American stance "illogical and domineering" in his public comments and taking on the latest brazen economic challenge by Trump in an aside. On Truth Social, the president stated that the money of the Iranian regime, currently frozen in American banks, will now be used to pay "any and all damages" to the ships and cargo that were attacked during the battle. Araghchi responded by saying seizing assets to pay for future claims other than those in question would set a bad precedent, saying anyone who knows a history of "confiscation" would understand that "no one's assets are safe" when governments “normalise confiscation” on that basis. The deal reveals that missiles and drones are not the only weapons in play: billions in frozen Iranian money is now up for trade.

The military situation over night was no less tense. CENTCOM said its planes had hit command centers, drone storage areas, communications systems and coastal and maritime radar and communications facilities in Ahvaz, nearby Omidiyeh, the port of Bandar Abbas and Qeshm island in the strait itself. Bahrain deployed its air-raid sirens following an attack by Iran's military forces on fuel depots and warehouses at Isa Air Base where there is a significant American presence. Iran said it also had targeted hangars and barracks at Al-Azraq in Jordan, but the Jordanian authorities had refuted the claim several hours later. Drone attacks have occurred in Iraqi Kurdistan near Erbil airport, home to coalition troops and a key American consulate, and also in a number of other locations, making such incursions near the airport almost a routine occurrence since the war began.

Two Iranian officials took the step further and told reporters that if Trump does decide to deliver on promises to bomb Tehran and attack infrastructure domestically, the response would involve missiles on Tel Aviv and a call to the Houthis for blocking shipping at the Bab al-Mandab strait. It would be a change from recent weeks, when Israel had largely remained out of the renewed round of strikes, in spite of fighting alongside American troops at the start of the war on Feb. 28 and taking in hundreds of Iranian ballistic missiles then.

The economic impact is manifesting in the region and elsewhere. Brent crude rose to a new high this week, just over $100 a barrel for the first time in months, but subsided slightly, and West Texas Intermediate was in the mid-$80s to low 90s. It's more than 30 percent higher than it was prior to the war's reignition, which has been fuelled, in part, by renewed strikes around Hormuz, Houthis attacks on two Saudi tankers in the Red Sea rebranded as a new blockade, and Kazakhstan's decision to suspend exports through its Caspian Pipeline Consortium terminal after it was hit by drones. American drivers have felt it firsthand: The national average gas price has jumped from below $3 per gallon to more than $3.70 in just a few weeks. Analysts at some of the big banks have been setting up triple-digit price targets in the case of a total shutdown of the strait, with some projecting prices to reach $150 or more, despite others predicting a price softening next year if a diplomatic solution is ultimately reached.

The standoff is changing the way global trade flows. Insurers for vessels transiting the Gulf have withdrawn coverage, shippers are subtly rerouting cargo around more expensive and longer routes, and Asian refiners, which are getting more dependent on the region, are adjusting both cost and risk. Gulf producers such as Iraq, the UAE and Kuwait have already reduced production and refining capacity, indicating that even the biggest players in the OPEC group aren't wagering their prospects of a quick resolution but instead are hedging their bets in case the disruption spreads.

In the diplomatic arena Araghchi has broadened his warnings past Washington and informed his counterparts in Kyrgyzstan that any country that supported the American campaign would be held internationally accountable an unmistakable message to Britain and Bulgaria, who both allowed American planes to land on their territory. London replied that it was prepared to defend the UK "on our soil or abroad. Trump is considering what he has called the “biggest strike of the war so far” and is floating the idea of direct Israeli involvement, while Prime Minister Benjamin Netanyahu holds his security cabinet.The days ahead could be more of the same as Trump considers what he has called the “biggest strike of the war so far” and Israel’s prime minister convenes his security cabinet, and floats the possibility of direct Israeli involvement.