Iran and the United States traded their heaviest blows on shipping in the six-month-old conflict, sending Brent crude above $100 a barrel and raising fears of a broader Middle East war.

Iran's Revolutionary Guard said Wednesday it attacked 10 ships near the Strait of Hormuz — including two US vessels and eight oil tankers — hours after the American military said it sank five Iranian tankers, in the largest declared exchange of fire on shipping since the six-month-old conflict began.

The escalation sent the international Brent crude benchmark above $100 a barrel for the first time since late July, as markets priced in a longer and wider Middle East war that threatens oil flows through some of the world's most important energy arteries.

Attack and response

The US military's Central Command said it destroyed five Iranian oil tankers overnight, releasing video of vessels ablaze before they sank. Washington described the strikes as retaliation for the Revolutionary Guard having targeted a US Navy warship twice with ballistic missiles over the preceding two days. The US said no Americans were harmed.

The IRGC said it responded with a ballistic missile barrage on a base used by US forces near Al Azraq in eastern Jordan, and fired on the two warships and the eight oil tankers attempting to cross an area of the strait it has declared off limits.

Jordan said its air defences intercepted 18 of the 20 Iranian missiles, with two falling in unpopulated areas and no casualties reported. A US official said the strikes in Jordan were ineffective and all American troops were accounted for.

The British maritime security agency UKMTO said it received reports of several merchant ships struck by disabling fire in the northern Gulf and Gulf of Oman, on either side of the strait. It was not immediately able to confirm casualties or the environmental impact. A vessel was also reported listing off Port Rashid in the United Arab Emirates, possibly having taken on water, and a liquefied natural gas tanker was reported damaged at the Emirati port of Khor Fakkan.

A policy of trading fire for tankers

The United States announced a new policy of attacking Iranian tankers in retaliation for fire that threatens its warships. "Iran continues to try to hit US naval ships, and for every time they do that or try to do that, they're going to lose tankers," US Secretary of State Marco Rubio told reporters during a visit to Colombia.

Iran, for its part, says it is imposing a wider off-limits zone around the strait and deploying more capable missiles against US ships. It has also threatened oil tankers in Kuwaiti and Bahraini ports, according to state media.

The attacks since the end of August have shattered a month of relative calm, with both sides striking military, shipping and energy assets. Iran has largely choked off transit through the strait that carried roughly a fifth of global oil before the war began on February 28. Washington has responded with a blockade of Iranian ports, though independent monitors say the extent to which oil is escaping has grown increasingly difficult to assess.

Oil markets respond

Brent crude futures were up about 2% at just under $100 a barrel by mid-morning, having earlier touched $100.19, while US West Texas Intermediate crude gained roughly 1.6% to about $94.50 a barrel. Prices have risen by roughly a quarter since early last month, and the average US retail price of diesel hit a fresh all-time high above $5.94 a gallon.

"Market participants appear to be pricing in a more prolonged conflict in the Middle East as well as the risk that the latest escalation in military strikes disrupts oil flows," said Hamad Hussain, senior climate and commodities economist at Capital Economics.

In the week before fighting resumed on August 30, roughly 8 million to 9 million barrels per day had flowed through Hormuz, about double the previous week's volume, according to Rystad Energy chief economist Claudio Galimberti, though that figure has since fallen below 2 million barrels per day. A growing number of banks, including Goldman Sachs, Bank of America and HSBC, have raised their crude price forecasts in recent days.

The International Energy Agency said last month it expected global oil supply to fall this year by 4.3 million barrels per day, or about 4%, even as non-OPEC producers including the United States, Canada and Guyana have ramped up output.

A widening regional conflict

The confrontation is spreading beyond the US and Iran. On Tuesday, Iran-aligned Houthi forces in Yemen attacked four cities in Saudi Arabia, setting fires at oil installations visible from space; Saudi authorities said 73 people were wounded. The fighting has extended shipping disruption from the Gulf to the entrance to the Red Sea, a key alternative route now that Hormuz traffic has collapsed.

Saudi Arabia briefly issued a threat alert for the southern city of Khamis Mushait on Wednesday before lifting it without providing details.

Iran's missile attacks on US bases have killed at least two American military personnel in the region since the start of the war, including in a strike on a base in Jordan in July.