Ali Khamenei was buried at the shrine of Imam Reza in Mashhad on Thursday, and the funeral, which had been accompanied by a six-day procession carrying his remains through Tehran, Qom, Najaf and Karbala, was held in the midst of the very conflict that killed him. American planes returned to Iranian airspace and explosions were heard along the Iranian coast in the port cities of Bandar Abbas, Konarak, Chabahar and Kish Island hours before people arrived at the golden dome at the shrine. If the Iranian officials are right, a US projectile hit the front of the Bushehr nuclear power plant itself, which if true would be one of the most sensitive targets hit in the fighting since it flared up in February.

It would be a bad time to be in the wrong place at the wrong time. On February 28 this war, Khamenei was killed in the war's first attack, together with his daughter, son-in-law, daughter-in-law and a grandchild. The attack also maimed his son, Mojtaba, who is rumoured to have lost a leg, and he has not made a public appearance or spoken on camera since ruling instead by written statements and with the Revolutionary Guard Corps, whose support he is said to have won, taking the reins behind his throne. Iranian state media claimed that the gathering in Mashhad "was in the millions", and the organizers openly stated that the event was not "just about mourning," but about institutional survival. The message was encapsulated by a senior fellow at the Center for International Policy "The leader is gone, but the state endures. Whether that message is getting home is another issue the funeral was delayed almost four months by the fighting and then, according to those involved in the planning, because of the security requirements of transporting a coffin safely through war-stricken cities still struggling to recover from the conflict.

The quiet was shattered by a well-known flash point: shipping through the Strait of Hormuz, the choke point that transports about a fifth of the world's traded oil and liquefied natural gas. Washington and Tehran had been moving closer to a memorandum of understanding to maintain the strait's freedom of navigation, but President Trump said the interim agreement was "over" after Iranian attacks on commercial vessels, including one off Oman that was carrying a Qatari LNG tanker that was set ablaze. The new attacks were directed on point, at restoring freedom of navigation in the strait, US Central Command said. Iran's response was swift: Its military has claimed it destroyed a Patriot interceptor battery in Kuwait, an early warning radar station in Qatar and fuel storage in Bahrain with one-way attack drones, with sirens now sounding as far as Jordan, where one is alleged to have hit an American base, and the question is how far will the conflict spread beyond the Gulf states where most of the retaliation has been directed? Additionally, Tehran claims that the US also targeted a railway bridge on the China-Iran rail corridor, a line that is also operated by Russian freight, thus directly placing Tehran's and Beijing and Moscow's economic interests within the range of the war.

The markets were almost in real time. Brent crude, which had fallen back toward pre-war prices on optimism the truce would persist this week, rose by over five percent in a single session this week, the biggest increase since early May, before closing around $79 a barrel early Thursday before falling back below $77 as traders sought to gauge Washington's intentions on whether to launch a prolonged series of strikes or a one-off campaign. WTI has been following a similar pattern with the price hovering in the low $70s. Sources in the shipping insurance industry report that they are already urging their customers, the owners of the vessels, to stop shipping through the Hormuz strait altogether, and according to ship-tracking data at least four tankers have reversed course from the strait this week in one day. Medium-term, energy analysts at MST Financial, and others, have been damningly clear about Iran's intention to maintain the ability to control the strait for months, even after any written agreement, with such flare-ups as this being part of the plan and not an accident. In American television this week, one senior former adviser in the Bush administration said in stark terms that those in the region already assume that Iran has influence over that route in reality, regardless of the language of any deal.

The economic bill within Iran is piling up on the military bill. The nation has already been burdened with the burdens of an economy already girded around by sanctions, a war from February onwards, and a round of internal unrest earlier this year which security forces crushed at great cost in blood. But in regional terms, the scene is equally volatile, with Asian equity markets mixed throughout the week, with Tokyo and Seoul down and Taipei and Hong Kong up, as traders read this as a rough indicator of the exposure of each economy to a long-term disruption from the Gulf. Gulf carriers and insurers are readjusting war-risk premiums almost on a daily basis, and European aviation regulators have already directed airlines to avoid flying over Iranian, Iraqi and Lebanese airspace, while relaxing a previous blanket warning against Israeli airspace.

The fighting has not yet collapsed into a ceasefire structure like it did briefly in the spring. So far, Iran has not responded formally to the strikes on its own territory other than retaliatory waves of drones at the targets in the Gulf, and Washington has not indicated if Thursday's action against the perimeter of Bushehr was a one-off or the beginning of a wider effort, perhaps even a campaign deliberately timed to coincide with the day Iran buried the man whose killing triggered this war.