WASHINGTON – Iran and its Arab neighbours were plunged back into war on Sept 2 by the biggest exchange of fire between Tehran and Washington since July, with American forces striking Iran’s southern coast and Iran firing at US bases across the region.

The United States threatened more devastating strikes.

Iran accused the US military of hitting a wedding party, killing five people and wounding dozens.

Asian and European stocks fell after the renewed US air strikes. Oil prices rose to levels unseen since July, compounding the economic impact of a global sell-off in bonds as disrupted energy supplies fuel inflation worldwide.

The US military’s Central Command said it struck Islamic Revolutionary Guard Corps (IRGC) air defences, radar systems, maritime assets, mine-laying capabilities and communications sites on Sept 1.

Iran reported hits on multiple targets near the Strait of Hormuz, the narrow waterway where Tehran has threatened tankers attempting to pass without its permission.

Iran responded by striking what it said were American assets in Bahrain, Jordan, Kuwait and Iraq. It said its aim is now to drive US forces out of the vast network of military bases they have maintained for decades across the Middle East.

“American evil in the region will be met with heavier, more widespread and devastating responses, and any country that cooperates with the aggressive American army must accept its dangerous consequences,” Iran’s military command said.