DUBAI/JERUSALEM/ANKARA, March 4 (Reuters) – The conflict between the U.S. and Iran was sharply escalated on Wednesday after an Iranian warship was sunk by a U.S. submarine off Sri Lanka, resulting in at least 80 casualties. At the same time, an Iranian ballistic missile fired toward Turkey was destroyed by NATO air defenses.
The escalation coincided with the emergence of the powerful son of Iran’s slain supreme leader as a leading contender to succeed him, signaling that Tehran’s resolve was not diminished. The missile incident marked the first time Turkey, bordering Iran and hosting NATO’s second-largest military, was drawn into the conflict, though it was stated by U.S. Defense Secretary Pete Hegseth that NATO’s collective-defense clause was not expected to be triggered.
The U.S. submarine strike was conducted against an Iranian vessel off Sri Lanka’s southern coast, thousands of miles from the Gulf, while shipping through the Strait of Hormuz was paralyzed for a fifth consecutive day, disrupting critical Middle East oil and gas exports. Insurance and naval escorts were pledged by U.S. President Donald Trump to vessels operating in the region, although around 200 ships were reported anchored off the coast, according to Reuters estimates.
Round-the-clock strikes on Iran were continued by the U.S. and Israel, with Hegseth asserting that the conflict was being won by U.S. forces. Iran’s missile launches were reduced, indicating that military capabilities had been greatly diminished, according to Dan Caine, chairman of the U.S. Joint Chiefs of Staff.
A compound in eastern Tehran housing multiple Iranian security agencies, including the Revolutionary Guard, intelligence, cyber warfare units, and internal police, was reportedly struck by Israeli air forces. Residents were also instructed to evacuate parts of southern Lebanon as the conflict with Hezbollah intensified, after drones and rockets had been launched into Israel.
Global markets were sharply impacted, with Asia experiencing significant losses, including a record drop in Seoul, despite assurances from Trump that critical shipping lanes would be reopened. European markets were later stabilized, following reports that early in the conflict, a path toward de-escalation had reportedly been offered by Iranian intelligence to the CIA. These reports were denied by Iranian officials, who described them as “absolute lies and psychological warfare,” according to semi-official Tasnim news agency.
Meanwhile, plans for the funeral of Iran’s former supreme leader, whose assassination was carried out by Israeli forces, remained uncertain as new explosions continued in Tehran.
