Minutes after US President Donald Trump on Monday asserted he might end the war soon, he took a sharp U-turn and threatened to escalate the ongoing conflict with Iran if it blocked oil shipments from the Middle East. Trump's warning came at the end of a day that saw global financial markets seesawing on concerns that Iran's security establishment was rallying behind new Supreme Leader Mojtaba Khamenei and was not prepared to back down any time soon.

Trump said the United States had inflicted serious damage on Iran's air force and navy and predicted the conflict would end well before the initial four-week time frame he had laid out, though he has not defined what victory would look like. He warned that US attacks could rise sharply if Iran sought to block tanker traffic through the Strait of Hormuz, which handles one-fifth of the world's oil supply.

"We will hit them so hard that it will not be possible for them or anybody else helping them to ever recover that section of the world," Trump said at a news conference.

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Iran responds to Trump's warning with a bold message

In response, Iran's Revolutionary Guards said it would not allow "one litre of oil" to leave the region if attacks from the United States and Israel continue. "We are the ones who will determine the end of the war," a spokesperson said, according to state media.

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The conflicting signals sent markets on a rollercoaster, with oil prices surging and stock markets nosediving before swinging in the other direction after Trump's prediction of a quick end to the war and reports of a possible easing of sanctions on Russian energy.

Ali Khamenei's death unites Iran

Khamenei, 56, a Shi'ite cleric with a power base among the security forces and their vast business empire, has been declared unacceptable by Trump, who has demanded Iran's unconditional surrender. Iranian state media showed large crowds in several cities rallying behind the new leader, waving Iranian flags and holding portraits of his father Ali Khamenei, the supreme leader killed by an Israeli strike on the war's first day.

(With inputs from Reuters)

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