US restores Iran oil sanctions as tankers hit in Hormuz

The United States has revoked a temporary sanctions waiver for Iranian oil after three tankers were struck in the Strait of Hormuz, raising pressure on Tehran as it negotiates with Washington over ending the Middle East war.

The US Treasury Department cancelled a license announced in June that had allowed Iran to produce, sell and deliver crude oil and related products until 21 August.

"Iran's actions in the Strait were wholly unacceptable to the United States and will be met with consequences," a US official told AFP.

The official, speaking on condition of anonymity, said the US-Iran memorandum of understanding was "entirely performance-based," warning that Tehran would see benefits only if it showed "good behaviour."

But US negotiators were continuing to work "in good faith towards a final deal," the official said.

British maritime security agency UKMTO said an "unknown projectile" hit a tanker overnight, causing a fire, before two more vessels were struck, at least one by a drone.

All three vessels were struck close to Oman, which had proposed a temporary transit corridor hugging its coastline - an initiative opposed by Iran as it seeks to impose fees on ships using the narrow waterway.

Qatar said one of the vessels was its LNG tanker Al-Rekayyat and blamed Iran, denouncing an "unacceptable" attack on international maritime navigation.

Doha later summoned Iran's deputy ambassador to lodge a complaint, demanding an explanation and urging Tehran to "immediately cease any practices undermining regional security."

"We hold Iran fully legally responsible for this attack and for any resulting damages or repercussions," Qatar's foreign ministry spokesman Majed Al Ansari wrote on X.

Iran voiced "dismay" over Qatar's accusations in a statement carried by state news agency IRNA, calling the claims "unacceptable."

The attacks, which ended more than a week of relative calm, revived concerns over freedom of navigation after Iran lifted its blockade of the vital waterway following a fragile ceasefire with the United States.

Oil prices rose by more than 2% as the renewed attacks reignited worries over global energy supplies and cast doubt on the durability of the US-Iran agreement.

Hundreds of thousands take to the streets in Qom

Iran's clerical rulers have exerted new found control over the ⁠world's most important energy shipping route, where they aim to install a permanent system to collect fees in what would amount to a huge shift of the balance of power in a region where Washington has long acted as guarantor of security.

At home, the leadership has used the mourning period to demonstrate its control after Ayatollah Ali Khamenei was killed alongside his daughter, granddaughter, son-in-law and daughter-in-law on the first day of the war.

The caskets of the slain leader and family were driven through the streets of the seminary city of Qom, where many hundreds of thousands of people carried flags and banners comparing him to martyrs whose deaths are foundational to the Shi'ite sect.

In chants they vowed to avenge Ayatollah Ali Khamenei.

A similar huge funeral procession was held in the streets of Tehran yesterday, following more solemn prayer events that began last Friday, attracting top figures in Iran's leadership and dignitaries from abroad.

The body of the late supreme leader arrived at Najaf international airport in Iraq tonight, Iraqi state media reported, ahead of funeral processions in the country's holy cities, which are home to the shrines most revered by Shia Muslims.

Iran began six days of public funeral ceremonies for Khamenei on Saturday, including a dedicated day to neighbouring Iraq - a Shia powerhouse with close ties to Tehran.

Trump: 'Make a deal or we're going to finish the job'

The war has been paused under an interim peace deal reached last month, intended to provide a 60-day period for ‌negotiations on a permanent deal. A round of indirect talks in Qatar concluded last week with no sign of headway towards a lasting peace.

Mr Trump has repeatedly threatened ⁠to resume bombing, most recently yesterday when he told reporters in the Oval Office: "We're either going to make a deal or we're going to finish the job.... We can knock down their bridges in one hour, we can knock out their energy supply."

Iran's Foreign Minister Abbas Araqchi said that under the terms of the interim ceasefire memorandum, negotiations on the final deal would "not commence if threats continue".

"Honor your signature," he wrote on X.

Oil prices, which have returned to around the pre-war level since last month's interim deal let ships resume sailing through the strait, ⁠ticked up around 1% today following the incidents in the waterway.

In launching the war four months ago, Mr Trump said his aims were to destroy Iran's nuclear and missile programmes, end its ability to threaten its neighbours and create ⁠conditions for Iranians to topple their leaders.

None of those objectives has been met, although Washington says a permanent deal will halt what it says is an Iranian programme that could make a nuclear weapon, which Iran says it never sought.

Despite five days of mourning, there has still been no sign in public of Ayatollah Ali Khamenei's son and successor Mojtaba, believed to have been disfigured by wounds in the same attack and yet to be shown in any image since the war began.

Three other sons of the slain leader prayed at the casket on Sunday.

Iran's leaders have portrayed the mass funeral gatherings as proof of national unity following the US -Israeli attacks, although it is difficult to assess how deep that loyalty runs in a country where media and communications are tightly controlled.

Just weeks before the war started, Iran's authorities killed thousands of demonstrators to put down some of the biggest anti-government ‌protests in the country's history, but there has been no sign of organised opposition in Iran since the war began.

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