Iran-US war latest: Tehran sets up potential clash with US Navy through ‘exclusion zone’ in Strait of Hormuz

Washington denies Iran's claims of successful attack on a US military vessel as a ‘total lie’

by Dan Haygarth, Shweta Sharma & James C. Reynolds

Iran has said it will unveil new sanctions for ships trying to pass through the Strait of Hormuz following a weekend of renewed exchanges with the United States, casting fresh doubt on progress towards an end to the six month conflict.

Mohsen Rezaei, the secretary of Iran’s supreme national security council, told state TV on Sunday that Tehran will announce a new ‘exclusion zone’ outside of the waterway in the coming days.

He said any ship seen entering the new restricted zone would be added to a sanctions list, reiterating that the waterway would only fully open again once the Americans “stop the sabotage, threats and attacks on Iran”.

Iran and the United States traded fire again over the weekend, forcing oil prices back up to $93 per barrel and driving Hormuz traffic down to its lowest since May.

The US claimed strikes on three Iranian oil tankers, including one off the coast of Kharg Island, after Iran’s Islamic Revolutionary Guard Corps launched ballistic missiles at two American naval vessels.

Saudi Aramco's Jizan oil facilities hit in strikes, FT reports

The Jizan oil refinery, owned by the world's biggest oil company ​Saudi Aramco, was attacked on Monday and the damage is being ascertained, the Financial Times reported, citing two people with knowledge of the matter.

The Jizan refinery is home to a 400,000 barrel per day refinery, among the largest in the country.

It was unclear where the attack came from. The Yemeni Houthi rebels have not claimed any new attack on Saudi Arabia, following weeks of attacks on Saudi ships in the Red Sea.

UAE working on new routes for energy exports to avoid being 'held hostage' by war

The United Arab Emirates is building alternative routes for its energy exports and trade to ensure they are not "held hostage" by the ongoing war between the US and Iran, UAE presidential adviser Anwar Gargash said on Monday.

The conflict has had a significant impact on Gulf Arab states, including the UAE, after Tehran fired missiles at the country and attacked its oil tankers in the Strait of Hormuz.

"Our energy exports will not be held hostage, nor will our trade and economic activity," Gargash told the Hili Forum in Abu Dhabi.

The UAE has been expanding port capacity along its eastern coast, as well as developing pipelines, railways and trade routes for alternative corridors, he said.

While acknowledging that relations with Iran could eventually recover, Gargash warned that rebuilding trust after the attacks could take decades.

He also criticised Gulf Arab states for failing to mount a coordinated response to Iran, saying they had been unable to translate shared concerns into a unified strategy.

Iran war hits Americans at the pump as gas prices smash record

Motorists across the U.S. are encountering record prices to fill their tanks for one final summer getaway over Labor Day weekend.

The average price for regular fuel stood at $4.14 a gallon entering the holiday—nearly a dollar higher than last year and far above the previous Labor Day record of $3.82 set in 2012, according to the AAA motor club.

Nicole Collins had planned a trip from Philadelphia to South Carolina to visit friends, but explained that her family spent most of the summer near home, skipping their routine weekend travel because driving became too costly.

"Gas is pretty high right now. It doesn’t help that we also have a baby, so we also have to pay for that," Collins said outside a gas station in Claymont, Delaware, where regular gas was $4.199 a gallon.

Fuel prices escalated after the U.S. and Israel launched strikes on Iran in February and have remained high. Tanker traffic through the critical Strait of Hormuz has dropped precipitously, with Iran refusing to reopen the passage.

"Everything points to the Iran War and the Strait of Hormuz," said Tom Seng, a professor of energy finance at Texas Christian University.

Energy Secretary Chris Wright offered few details on when drivers might see pump relief, acknowledging prices are higher now than Labor Day 2025.

"Yes, they’re higher today, but we’re doing everything we can to push them down," Wright said Sunday on ABC’s "This Week."

The nationwide average for regular gasoline remains well below the record high of $5.02 per gallon set in June 2022.

But diesel is a different story: It reached a record national average of $5.85 a gallon on Friday.

Freight haulers and delivery fleets consume vast quantities of diesel, and those elevated transport expenses are passed to consumers at grocery stores and through package delivery fees.

"It doesn’t really seem like there’s an end to it," Collins said.

Gasoline prices typically ease as summer driving ends and refineries switch to cheaper winter fuel blends.

But Seng noted that other elements beyond Middle East instability make future prices unpredictable. U.S. refineries are running at 98% capacity, many enduring harsh Texas heat. Should technical breakdowns occur or a severe hurricane force facilities offline, prices will struggle to fall.

The issue extends beyond the Middle East. Ukrainian drone strikes on Russian refineries are restricting diesel supplies, while Chinese refiners report falling output, said Matthew Metzgar, a clinical professor of economics at UNC Charlotte.

"There’s just less gasoline coming out of those refineries," Metzgar said.

Wright, the energy secretary, said the Trump administration is working to expand production and noted market forecasts indicate lower prices in coming months.

"If you look at the futures prices, if you wanted to buy today in bulk gasoline for two months out in November, it’s about $0.35 cheaper than it is today. So the marketplace thinks gasoline prices are going to move meaningfully lower," he said.

From a geopolitical perspective, individual drivers have minimal leverage to lower fuel prices.

However, price-tracking apps can offer savings, particularly on long trips, where roadside stations near interstates charge 10 to 15 cents more per gallon than nearby pumps slightly off the highway, Metzgar noted.