Iran attacks Kuwait, Bahrain U.S. military sites, army says

Iran attacks Kuwait Bahrain is now the market’s newest Middle East risk headline after Iran’s army said Friday it struck strategic U.S. assets and military bases in Kuwait and Bahrain. For investors, the immediate watch point is energy: the attacks came as oil prices were already falling on signs that crude flows through the Strait of Hormuz were improving.

Iran’s army said it targeted U.S.-used facilities at Kuwait’s Ahmad al-Jaber Air Base with drones, according to Iranian state media. Tehran said the targets included aircraft shelters, satellite communications systems and equipment storage facilities.

Iran’s army also claimed Thursday that it attacked U.S. facilities at Sheikh Isa Air Base in Bahrain. It said the targets there included power generators, navigation systems and support buildings.

Did Iran attack U.S. bases in Kuwait and Bahrain?

Iran’s army says it launched attacks on U.S. military assets in both countries. The reported strikes followed what U.S. Central Command described Wednesday as a “heavy wave” of U.S. strikes on Iran that hit dozens of Islamic Revolutionary Guard Corps targets across the country.

The Islamic Revolutionary Guard Corps, or IRGC, is a powerful Iranian military organization separate from the country’s regular army. Its targets and assets have been central to the U.S.-Iran conflict that began in late February.

The claims from Tehran came after Egypt said Thursday that a drone hit two ships at the Mediterranean port of Damietta and caused a fire. No group or government has claimed responsibility for that strike. The incident was the first attack on Egyptian soil since the U.S.-Iran war began in late February.

Why the Damietta strike matters for shipping

Hamish Kinnear, Middle East and North Africa analyst at risk intelligence firm Verisk Maplecroft, said in a Thursday research note that the Egypt drone incident showed how exposed the country could be if the conflict spreads. He also said the Suez Canal choke point is a potential target.

Kinnear wrote that drone and missile attacks on shipping this year have spread across the Caspian Sea, Black Sea, Mediterranean Sea, Red Sea, Persian Gulf and Indian Ocean. He said tactics developed in Ukraine and the Middle East are pushing maritime risk beyond established conflict zones.

Shipping risks can feed into markets because oil, gas and other goods move through narrow routes such as the Strait of Hormuz and the Suez Canal. If traders expect disruption, energy prices can rise because buyers may pay more to secure supply or reroute cargoes.

What happened to oil prices?

Oil prices moved lower Friday morning despite the new military claims, extending recent declines. The reason cited was improving traffic through the Strait of Hormuz, a key passage for crude exports, which reduced some supply concerns.

Brent crude futures for September delivery, the main international oil benchmark, traded nearly 2% lower at $87.30 a barrel. West Texas Intermediate futures for September delivery, the main U.S. benchmark, were down 2.3% at $81.71.

At the White House on Wednesday, President Donald Trump said he wanted Congress to add tariffs on Iran to a sanctions bill targeting Russia and Tehran that has bipartisan support. Such tariffs would have limited direct effect because the U.S. imports very little from Iran, but adding them could make the legislation harder to pass.

This story draws on original reporting from CNBC.