Tensions between the United States and Iran escalated further on July 21 as both nations conducted fresh military strikes amid ongoing conflict in the Middle East. The exchanges come amid a backdrop of heightened threats and regional instability impacting maritime commerce and energy supplies.

On the same day, then-U.S. President Donald Trump reiterated intentions to target Iran's nuclear facility at Natanz "pretty soon," referencing prior bombings of the plant in June 2025 that had reportedly "totally obliterated" the site. Iran responded with promises of retaliation, and state media reported new missile and drone attacks against U.S. military installations in Bahrain, Kuwait, and Jordan. Iran’s health ministry confirmed that U.S. strikes on Iranian targets had resulted in 50 civilian deaths and wounded 500 others.

Defense Secretary Pete Hegseth testified before a Senate committee that the ongoing conflict, which lacks formal congressional authorization, had already cost $37.5 billion. He requested an additional $70 billion in supplemental funding, highlighting the need to replace depleted missile inventories. Meanwhile, Iran intensified attacks across the Gulf, targeting desalination plants integral to supplying freshwater to several arid Gulf countries. Kuwait reported responding to a drone and missile strike on July 21, with prior damage noted at power and water generation facilities.

Amid rising maritime insecurity, a tanker navigating the Strait of Hormuz reported being struck by an unidentified projectile, prompting crew evacuation to lifeboats, according to the UK Maritime Trade Operations center. Iran’s Revolutionary Guard Corps stated that two oil tankers caught fire following explosions as they attempted to pass through the southern shipping lane of the strait, which the United States has encouraged vessels to use. Iran insists ships transit via a northern route closer to its coastline, where it intends to impose fees for passage. Recent shipping data indicated a decline in vessel traffic through the Strait, with only four commodity shipments recorded on July 20, mostly along the northern passage.

Saudi Arabia has partly mitigated shipping disruptions by redirecting oil exports through pipelines to Yanbu on the Red Sea. However, escalating tensions raise concerns that the Houthis, a Yemeni armed group aligned with Iran, might close the Bab el-Mandeb Strait—an important maritime chokepoint connecting to the Red Sea—which could severely restrict Saudi exports and affect global oil markets.

Despite the violence, there have been diplomatic efforts to de-escalate the conflict. A senior Iranian official disclosed receiving a mediator-proposed 10-day ceasefire aimed at preserving the interim agreement reached in June. Iran’s Interior Minister Eskandar Momeni visited Pakistan, a key mediator, urging continued engagement.

U.S. Central Command announced that recent strikes targeted Iranian military command hubs, missile and drone launch sites, maritime assets, and air defense installations. Iranian state media reported explosions around Shiraz in southern Iran and attacks in coastal cities Konarak and Chabahar, as well as a civilian area near Abdanan in the west.

While the Houthis have not yet closed the Bab el-Mandeb Strait, U.S. authorities remain vigilant. President Trump warned of decisive action should the strait be blocked, underscoring the importance of maintaining open channels for international shipping.

Global oil markets responded to the escalating conflict with increased volatility. On July 21, Brent crude prices rose by more than 2%, trading above $91 a barrel, while U.S. gasoline prices surpassed $4 per gallon, reflecting concerns about supply disruptions stemming from the regional instability.