Oil prices extended gains on Monday (Mar 16) as the US-Israeli war against Iran entered a third week, putting oil infrastructure at risk and keeping the Strait of Hormuz shut in the biggest disruption to global supplies ever.

Brent crude futures jumped US$2.01, or 1.95 per cent, to US$105.15 a barrel by 11.38pm GMT after settling US$2.68 higher on Friday.

US West Texas Intermediate crude climbed US$1.61, or 1.63 per cent, to US$100.32 a barrel, after gaining nearly US$3 in the previous session.

Both contracts have surged more than 40 per cent this month to their highest levels since 2022 after the US-Israeli attacks on Iran prompted Tehran to halt shipping through the Strait of Hormuz - a key chokepoint for a fifth of the global oil supply.

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US President Donald Trump threatened further strikes on Iran's Kharg Island oil export hub after hitting military targets over the weekend, drawing a defiant response of more retaliation from Tehran. Kharg Island handles about 90 per cent of Iran's oil exports.

Iranian drones hit a key oil terminal in Fujairah in the United Arab Emirates shortly after the attacks on Kharg. Oil loading operations at Fujairah have since resumed, four sources said, but it was unclear if the operations were back to normal.

Fujairah, outside the Strait of Hormuz, is the outlet for about 1 million barrels per day of the UAE's flagship Murban crude oil - a volume equal to about 1 per cent of world demand.

"The US is weighing high-risk ground options including raiding nuclear sites for Iran's enriched uranium, seizing the Kharg Island oil hub, and occupying southern Iran to protect the Strait of Hormuz," SEB analyst Erik Meyersson said in a note.

"All of these imply significant escalation and require a tolerance for substantially higher risk."

Trump has urged allies to deploy warships to help secure the strategic gateway. He plans to announce a coalition to escort ships through the Strait of Hormuz as soon as this week, the Wall Street Journal reported on Sunday.

OIL RESERVES

The International Energy Agency on Sunday said more than 400 million barrels of oil reserves will begin flowing to the market soon, a record draw aimed at combating price spikes caused by the Middle East war.

Stocks from Asia and Oceania countries will be released immediately, and those from Europe and the Americas will be available at the end of March, the agency said.

Meanwhile, the Trump administration has rebuffed efforts by Middle Eastern allies to start diplomatic negotiations, according to three sources familiar with the efforts, while Iran has rejected the possibility of any ceasefire until the US and Israeli strikes end, dimming hopes of a quick end to the conflict.

"As the conflict enters its third week, the lack of a clear denouement has left global markets increasingly worried about an uncontrollable escalatory spiral," SEB's Meyersson said.

Still, US Energy Secretary Chris Wright said on Sunday that he expects the US war with Iran to end within "the next few weeks", with oil supplies rebounding and energy costs declining afterwards.

BEIRUT: UN peacekeepers said they were fired upon "likely by non-state armed groups" in south Lebanon on Sunday (Mar 15), while a Hamas source said an Israeli strike killed an official from the Palestinian militant group.

Israel said no direct talks were planned with Lebanon to end the latest war with militant group Hezbollah, which has been raging for two weeks. The statement came a day after a Lebanese official said Beirut was preparing a delegation to negotiate with Israel.

Lebanon was dragged into the Middle East war on Mar 2 when Iran-backed Hezbollah attacked Israel in response to the killing of Iranian supreme leader Ayatollah Ali Khamenei in US-Israeli strikes, with Israel launching air raids on the neighbouring country and troop incursions into border areas.

Lebanese authorities said the death toll in Israeli attacks rose to 850, while more than 830,000 people have been registered as displaced, including some 130,000 staying in collective shelters.

Driving rain on Sunday piled more misery on displaced people, hundreds of whom have been sleeping rough or in tents near central Beirut's seafront.

Coffee shop owner Nader, 42, displaced from Beirut's southern suburbs, said he had rebuilt his home after the previous Israel-Hezbollah conflict in 2024 and feared it had again been destroyed.

"Here we have nothing, and the situation is very bad with the heavy rains and wind - it's very cold, lots of babies are sick, and we can't protect them," he told AFP.

"NO" TALKS

The United Nations Interim Force in Lebanon (UNIFIL) said its peacekeepers were fired upon three times on Sunday, "likely by non-state armed groups" in the country's south, two days after a different position was hit by fire that Lebanon's official National News Agency (NNA) had blamed on Israel.

The NNA reported Israeli strikes on the country's south and east on Sunday, while Hezbollah claimed a series of attacks on sites in Israel and on Israeli troops in south Lebanon.

The group also said its fighters fired an "advanced missile" at the Palmachim air base south of Tel Aviv.

The NNA said Israel struck "an apartment in a residential building" in a northern district of the coastal city of Sidon, killing one person and causing a fire.

An AFP correspondent saw damage to an apartment building as the army cordoned off the area while rescue teams fought a blaze and residents rushed into the street, some carrying belongings.

The Hamas source, requesting anonymity, said official Wissam Taha was killed.

Israel has repeatedly struck Hamas targets in Lebanon in recent years, including during previous hostilities between Israel and Hezbollah that erupted over the Gaza war, and after a 2024 ceasefire.

Lebanese President Joseph Aoun has proposed direct negotiations with Israel, but Israeli Foreign Minister Gideon Saar on Sunday responded "no" when asked whether Israel was set to hold such talks.

MARITIME BORDER DEAL

Israeli Energy Minister Eli Cohen instead called for the cancellation of a US-brokered 2022 maritime border deal with Lebanon, adding that "a vague promise" of improved security for Israel under the deal "was not fulfilled".

A Lebanese official had told AFP on Saturday that the country was preparing to form a delegation to negotiate with Israel, but that there was no agenda, timing or location yet decided for any talks.

French President Emmanuel Macron has said the Lebanese government was ready to engage in "direct talks" with Israel, and he offered to host negotiations.

Israel's military also renewed an evacuation warning for Beirut's southern suburbs, which it has repeatedly struck in the past fortnight.

An AFP photographer in south Beirut saw empty streets covered with debris and buildings flattened, with smoke still rising in the area after strikes in previous days.

Southeast of Sidon, Lebanon's health ministry said an overnight strike killed three people in the village of Al-Qatrani while Israel's military said it hit "several Hezbollah launch sites" there.

The Israeli army also said it had destroyed "command centres" belonging to Hezbollah's elite Radwan Force in Beirut.

TEHRAN: Israel said Sunday (Mar 15) it still has thousands of targets to strike inside Iran as the Islamic Republic warned other countries against getting involved in the war, which has spread across the Middle East.

Tehran's warning came as Rome reported a base in Kuwait hosting US and Italian troops was hit by a drone attack, while Iran told its neighbours it had "ample evidence" that US bases on their territory were being used to launch attacks.

"We still have thousands of targets in Iran, and we are identifying new targets every day," Israeli military spokesman Brigadier General Effie Defrin said more than two weeks into the US-Israeli air campaign against Iran.

Tehran has responded to the war by threatening shipping in the vital Strait of Hormuz - which usually sees passage of 20 per cent of global oil and gas exports - an issue US President Donald Trump discussed with British Prime Minister Keir Starmer on Sunday, the latter's office said.

Trump had called the previous day on other countries to work with Washington to secure the strait, the closure of which has thrown energy markets into turmoil since the conflict broke out.

But in a phone conversation with his French counterpart Jean-Noel Barrot, Tehran's top diplomat Abbas Araghchi called on other countries to "refrain from any action that could lead to escalation and expansion of the conflict".

Arguing that the US security umbrella in the region was "inviting rather than deterring trouble", Araghchi on X urged neighbouring countries "to expel foreign aggressors".

The drone attack at the Ali Al Salem airbase in Kuwait destroyed an unmanned aircraft belonging to Italy, but caused no casualties, the Italian military said.

Rome's foreign minister, Antonio Tajani, sought to play down the attack - the second on an Italian base in the Middle East this week - insisting: "We are not at war with anyone."

Iraqi authorities, meanwhile, said rockets wounded five people at Baghdad's airport, which houses a US diplomatic facility, while Iran's Revolutionary Guards said about 700 missiles and 3,600 drones had been fired at US and Israeli targets so far.

GUARDED RESPONSES

Trump responded to Iran's threats to shipping by calling on "China, France, Japan, South Korea, the UK and others" to send ships to escort tankers, while the US military continues to pound drone, boat and missile launch sites in Iran on the north shore.

But the various countries he listed have given only guarded responses.

The UK defence ministry was non-committal, saying "we are currently discussing with our allies and partners a range of options to ensure the security of shipping".

South Korea said it was monitoring Trump's remarks, while the policy chief of Japan's ruling party, Takayuki Kobayashi, said the bar for sending Japanese navy ships to the region under existing laws was "extremely high".

ENERGY MARKETS

Global oil prices have surged by 40 per cent as Iran has choked off the vital sea passage and attacked energy and shipping industry targets in its Gulf neighbours.

The International Energy Agency, whose members recently decided to release 400 million barrels of oil from their strategic reserves, said Sunday that "stocks will be made available by IEA Member countries in Asia Oceania immediately". The Americas and Europe would follow suit in the weeks to come.

As global markets reel, Trump has doubled down, telling NBC News in a weekend interview that he thought Tehran was keen to come to the table but that the US would keep fighting to force better terms.

"Iran wants to make a deal, and I don't want to make it because the terms aren't good enough yet," Trump told NBC News.

But Araghchi, in an interview with the US network CBS's "Face the Nation", denied Tehran was asking for an agreement.

"We are stable and strong enough," Araghchi said. "We don't see any reason why we should talk with Americans, because we were talking with them when they decided to attack us."

CAFES REOPEN

Despite the sharp rhetoric, the atmosphere in Tehran was the most normal it has been since the start of the war on Feb 28.

Traffic was busier than last week and some cafes and restaurants had reopened, as had more than a third of stalls in the Tajrish bazaar, a popular shopping hub, with Nowruz, the Persian New Year, just days away.

Some shoppers queued at ATMs to withdraw cash. Online operations at Bank Melli, one of the country's largest, had been paralysed in recent days.

It was a similar story outside the capital. In an interview from Tonekabon, a city in Mazandaran province on the Caspian Sea, 49-year-old Ali told AFP that shops were open and crowded despite steep price rises.

"Only the main square is closed every night, and government demonstrations take place," he said, adding that only Iran's domestic intranet was working, without outside connections.

More than 1,200 people have been killed by US and Israeli strikes, according to Iranian health ministry figures that could not be independently verified.

The UN refugee agency says up to 3.2 million people have been displaced in Iran.

The Pentagon says more than 15,000 targets in Iran have been hit by US and Israeli forces.

GAZA: Gaza's Hamas-run interior ministry said an Israeli air strike on a police vehicle Sunday (Mar 15) killed nine officers in the centre of the Palestinian territory, updating an earlier hospital toll of eight.

The strike came as a Hamas delegation was due to meet with Egyptian officials in Cairo, according to a source from the Palestinian Islamist movement.

Gaza's civil defence agency had also reported another four people killed in an earlier Israeli strike.

When asked by AFP about both incidents, the Israeli military said it was looking into the reports.

The Gaza interior ministry, which operates under Hamas authority, accused the Israeli military of committing a "heinous crime this afternoon when it targeted a police vehicle carrying several officers and personnel in the central governorate".

"The attack resulted in the killing of nine officers and personnel," it said in a statement, listing the victims, among them the police chief for the central governorate, Colonel Iyad Abu Yousef.

Earlier, th Al-Aqsa hospital in Deir el-Balah said it had received the bodies of "eight martyrs" killed in the strike on the town of Zawaida in central Gaza.

Hamas condemned the incident, saying: "This treacherous crime reflects the truce face of the occupation and its exposed policy aimed at continuing the war of genocide and deepening the humanitarian catastrophe in the Gaza Strip."

CEASEFIRE VIOLATIONS

Violence has persisted in the war-shattered Palestinian territory despite a ceasefire which came into effect on Oct 10, with both Israel and Hamas regularly accusing each other of violations.

Earlier on Sunday, Gaza's civil defence agency - which operates as a rescue force under Hamas authority - said an Israeli strike killed four people in the Nuseirat refugee camp in the centre of the territory.

In a statement, Hamas spokesman Hazem Qassem condemned the bombing as "a blatant violation of the ceasefire agreement".

The latest deaths came as a Hamas source told AFP that a delegation in Cairo had met with Bulgarian politician Nickolay Mladenov, named high representative for Gaza under US President Donald Trump's Board of Peace.

The board was established after the Trump administration, with longtime mediators Qatar and Egypt, negotiated a ceasefire to halt two years of devastating war in Gaza.

The Cairo delegation, headed by Hamas official Nizar Rayyan, "demanded an immediate halt to all violations and called on Israel to implement the second phase of the ceasefire agreement and open the Gaza crossings", the source said.

At the start of the joint US-Israeli strikes on Iran on Feb 28, Israel announced the closure of all crossing points into Gaza as a "security" measure.

But on Sunday, it said it would partially reopen the Rafah crossing on the border between the Palestinian territory and Egypt.

"The Rafah Crossing will reopen for movement in both directions starting this coming Wednesday (Mar 18), for limited movement of people only," COGAT, the Israeli defence ministry agency in charge of civilian affairs in the Palestinian territories, said in a statement.

It had previously reopened the Kerem Shalom crossing in the territory's south to allow for the "gradual entry of humanitarian aid".

Gaza's health ministry, which operates under Hamas authority, says at least 663 Palestinians have been killed since the start of the truce.

The Israeli military says at least five of its soldiers have been killed in the same period since Oct 10.

Media restrictions and limited access in Gaza have prevented AFP from independently verifying casualty figures or freely covering the fighting.