Iran fights back despite war's most intensive strikes

Iran fired at Israel and targets across the Middle East on Wednesday, while at least three ships were hit in the Gulf, demonstrating Tehran can still fight back and disrupt energy supplies despite the most intense US-Israeli strikes yet.

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Oil prices that shot up earlier this week have eased and stock markets have rebounded, with investors betting for now that US President Donald Trump will find a quick way to end the war he began alongside Israel nearly two weeks ago.

But so far, there has been no letup on the ground, or any sign that ships can resume sailing through the Strait of Hormuz, where a fifth of the world's oil has been blockaded behind a narrow channel along the Iranian coast in the worst disruption to energy supplies since the oil shocks of the 1970s.

The Pentagon described its attacks on Iran on Tuesday as the most intensive of the war so far. After offices of an Iranian bank were hit overnight, Iran said it would now attack US and Israeli banking targets across the Middle East.

A source told Reuters that Israel believed Iran's new supreme leader, Mojtaba Khamenei, had been injured early in the war, when airstrikes killed his father, mother, wife and a son.

Reuters was unable to confirm the younger Khamenei's condition, but state television has used a term that means "wounded veteran" to describe him. He has not appeared in public or issued any direct message since being named the successor to his long-ruling father, Ayatollah Ali Khamenei.

The Iranian military said on Tuesday it had launched missiles at a US base in northern Iraq, the US naval headquarters for the Middle East in Bahrain, and at Be'er Ya'akov city in central Israel.