The war between the United States and Iran intensified on Wednesday after a U.S. submarine sank an Iranian warship off the coast of Sri Lanka, leaving at least 80 people dead, while NATO air defences intercepted an Iranian ballistic missile headed toward Turkey.
The escalation unfolded as the son of Iran’s slain supreme leader emerged as a leading contender to replace him, signalling that Tehran is unlikely to yield to pressure five days after the United States and Israel launched a military campaign that has killed hundreds and shaken global markets. The missile incident marked the first time Turkey—an Iranian neighbour with NATO’s second-largest military—has been directly pulled into the conflict, though U.S. Defence Secretary Pete Hegseth said it was unlikely to trigger NATO’s collective defence clause.
The widening reach of the conflict was underscored by the submarine strike on the Iranian vessel near Sri Lanka’s southern coast, far from the Gulf, as fighting continued to paralyse shipping through the Strait of Hormuz for a fifth consecutive day, disrupting vital Middle East oil and gas flows.
U.S. President Donald Trump has pledged to provide insurance and naval escorts for ships transporting energy from the region to curb surging costs, though roughly 200 vessels remain anchored offshore amid the disruption. Oil prices have remained near their highest levels in more than a year.
The United States and Israel continued their strikes on Iran, with Hegseth saying Washington held the advantage in the conflict. Military officials also noted that Iran appeared to be launching fewer missiles, suggesting its capabilities had been significantly weakened.
Israel said it had struck a compound in eastern Tehran housing key security institutions, including the Revolutionary Guard, intelligence units, cyber-warfare teams and internal police forces. Authorities in Israel also eased some public safety restrictions for businesses while keeping schools closed.
The conflict has also spread to neighbouring areas. Israel urged residents to evacuate parts of southern Lebanon as it intensified operations against the Iran-backed group Hezbollah after cross-border drone and rocket attacks earlier in the week.
Financial markets reacted sharply to the escalation. Asian markets fell steeply, including a record drop in Seoul, as investors worried the vital shipping route might remain blocked despite assurances that it would reopen. European markets later stabilised and U.S. stocks closed higher amid hopes the war could end soon.
Meanwhile, Iran postponed farewell ceremonies for Supreme Leader Ayatollah Ali Khamenei, who was killed in an Israeli strike on Saturday. The Assembly of Experts is expected to choose his successor soon, only the second leadership transition since the Islamic Republic was founded in 1979.
Among the possible successors is Mojtaba Khamenei, the late leader’s son, who has built influence within Iran’s security establishment and its economic networks. Another potential candidate is Hassan Khomeini, grandson of the Islamic Republic’s founder and a figure associated with the reformist camp.
The U.S. military said it had destroyed or sunk more than 20 Iranian vessels, including the frigate struck near Sri Lanka. Local officials said dozens of sailors were rescued while many others remain missing.
As tensions rise, several European countries have moved forces closer to the region to protect their citizens and strategic interests. Britain and France said they would deploy naval and air assets to help defend against possible Iranian retaliation, while Greece has sent aircraft and warships to nearby Cyprus.
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