America keeps striking Iran, says it isn't a war, and talks through Qatar
US jets hit Qeshm island twice this week, a sailor was killed off Oman, and Qatar was reported to have a plan to reopen the Strait of Hormuz. Oil fell 16% on hopes of a deal, but central banks in Britain and Australia raised interest rates to stop the war's costs spreading.
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Late on Monday 2nd November, explosions shook Qeshm, Iran's largest island, which sits in the Strait of Hormuz opposite the port of Bandar Abbas.1 American officials, speaking anonymously, said US jets had struck sites from which Iran had fired surface-to-air missiles at American aircraft, and that the strikes "were not a resumption of major combat operations".2 The next day President Donald Trump confirmed them: "They built an anti-aircraft facility... As soon as it was completed, we hit it last night very nicely."3
The same evening, an Indian-flagged vessel with 14 Indian crew was hit by what India called an "unidentified aerial object" near Limah, on Oman's side of the strait. Oman's coastguard rescued 13; one sailor died of his injuries. Nobody has said who fired.4
On Friday Iranian state media reported two more explosions on Qeshm. Trump called the strikes "minor": "they built a little bit of an anti-aircraft device and we knocked it out in about 15 minutes, maybe five."5
"It's not a war"
The war between the United States and Iran began with American and Israeli strikes on 28th February.6 A ceasefire agreed in April broke down over the summer, and Iran has restricted shipping through the strait, through which about a fifth of the world's oil passed before the war.
Trump has taken to describing it differently. "This isn't a war — it's a very soft war," he told Fox News on Monday.7 On Friday he told reporters: "It's not a war. It can't be a war when for five months nobody was hurt, killed, or anything else."8 The record says otherwise: Iranian missiles killed American troops at a base in Jordan in July,9 and a sailor was killed off Oman on Monday.4
It was the same week in which his vice-president, JD Vance, said the war was why Republicans lost the midterm elections (see the first story in this edition).
A plan through Qatar
Alongside the strikes, the two sides were talking through Qatar. Iran sent a new proposal through Qatar on Thursday,10 Trump spoke to Qatar's emir on Friday, and "We are talking to Iran. We have been," he said.5
On Saturday the Guardian reported the outline of a Qatari plan. The United States would lift its naval blockade of Iran's ports and release part of about $8bn of frozen Iranian money; Iran would let inspectors from the International Atomic Energy Agency, the UN's nuclear watchdog, visit its bombed nuclear sites; and Iran would reopen the Strait of Hormuz on the second day.11 Neither Qatar nor Iran has published it. "We will never have a perfect peace deal but you can't wait for that perfect moment," Qatar's prime minister, Sheikh Mohammed bin Abdulrahman Al Thani, said at Oxford University on Friday.12
Pressure ran the other way too. The US State Department offered up to $20m for information on Iran's nuclear programme,13 and Iran was reported to be handing out iodine tablets, which protect the thyroid from radiation, to people living near its nuclear sites.10
Oil traders bet on the talks. Brent crude futures, the main international oil price, ended the week at about $98 a barrel, down roughly 16%, their biggest weekly fall since 2020.14
The cost reaches mortgages
The war's earlier rise in energy prices is still working its way through economies far from the Gulf. On Tuesday the Reserve Bank of Australia raised its main interest rate to 4.85%. Its board said the higher outlook for inflation "partly reflects higher fuel and other commodity prices affected by the conflict in the Middle East".15 "Monetary policy cannot impact global oil prices," said its governor, Michele Bullock; the rise was "to address domestic capacity pressures".16
On Thursday the Bank of England raised Bank Rate, the rate that sets the cost of most British mortgages and loans, from 3.75% to 4%. It was its first rise since August 2023,17 and eight of the nine members of its Monetary Policy Committee voted for it; the ninth, Catherine Mann, wanted a bigger rise. The Bank said UK inflation, 3.5% in September, is now expected to rise to around 5% by the middle of next year, and that "the conflict in the Middle East is now in its ninth month".18
"Today's increase shouldn't be seen as the first in an inevitable long sequence of hikes," said the Governor, Andrew Bailey. "But, unless the conflict is resolved, neither does it seem likely to be the last increase."19
Late on Saturday
After the oil market had closed for the week, the signals turned again. On Saturday US Central Command set up Task Force Iron Gate "to prevent Iran from using ground routes to transport advanced weapons and other materials"; its commander, Admiral Brad Cooper, said it would reinforce "our ironclad blockade against Iran at sea".20 Iran's Revolutionary Guard navy said two oil tankers had "suffered severe damage and stopped after hitting sea mines" in what it called an unsafe part of the strait. Iran's official news agency reported explosions on Qeshm and in Jask, Sirik and Bandar Abbas, without saying what caused them.20 The Revolutionary Guard also said it had lifted its self-imposed limit of 2,000km on the range of its ballistic missiles, though Iran is not known to have missiles that can fly further. Iran was still reviewing Qatar's proposals, the Associated Press reported.21
Where it stands
Strikes and talks are running together. The United States says the strikes are defensive, Iran's chief negotiator says his country "will not surrender to the enemy's threats",7 and the Qatari plan has been reported but not agreed. For British borrowers, the Bank of England has said what would bring rates down again: real progress towards ending the war.18