U.S.-Iran Confrontation Escalates: U.S. Military Shoots Down Iranian Drone, Oil Prices Rise, U.S. Stocks Under Pressure

Just as the global markets were expecting the next confrontation between the US and Iran to wait until the Friday Istanbul negotiations, the regional situation suddenly heated up on Tuesday.

According to CCTV News, US Central Command spokesperson Tim Hawkins disclosed on Tuesday that US fighter jets belonging to the Lincoln Carrier Strike Group shot down an Iranian drone in the Arabian Sea. Hours after this incident, a US-operated, US-flagged chemical tanker “Stena Imperative” was approached and boarded by Iranian gunboats in the Strait of Hormuz.

As the Iranian drone sank to the bottom of the sea, US stocks declined further, with the tech-heavy Nasdaq dropping over 2%. International oil prices rose accordingly; by press time, both US WTI and Brent crude oil had increased by over 1.7%.

(Brent crude daily chart, Source: TradingView)

According to Hawkins, in the first incident on Tuesday, an Iranian “Witness-139” (Shahed-139) drone was shot down by onboard F-35C fighters while attempting to approach the Lincoln aircraft carrier. At the time of the incident, the Lincoln was approximately 500 miles (800 kilometers) off the coast of Iran.

The US military stated that no US personnel were injured and no US equipment was damaged in the incident.

In the subsequent merchant ship incident, Iranian gunboats quickly circled the ship three times, during which a “Phantom” drone was also overhead. Hawkins said that Iranian forces used radio to call the tanker, ordering the captain to “shut down the engines and prepare to be boarded”. Subsequently, the USS McFau, a US Navy destroyer stationed in the area, intervened and escorted the merchant ship away from the region, easing the situation.

According to a report from CCTV International citing Iran’s Fars News Agency, this incident was caused by the ship “being intercepted for entering Iran’s territorial waters without permission”.

As the maritime confrontation unfolded, US and Iranian officials also faced off on the diplomatic front.

On Tuesday, market reports indicated that Iran proposed moving this week’s negotiations from Istanbul to Oman and directly engaging in bilateral talks with the US, rather than having regional countries attend as observers. An informed source said this was because Iran wanted to limit negotiations to nuclear issues and avoid discussing other regional priorities such as ballistic missiles and military proxies.

Regarding this rumor, White House Press Secretary Karine Jean-Pierre stated at a press conference on Tuesday that she had spoken with Trump’s Middle East envoy, Steve Vetter, about the latest events in the Gulf region and Iran’s new demands.

Jean-Pierre said: “As of now, talks with Iran are still proceeding as planned. From our side, negotiations will continue later this week.”

Jean-Pierre also pointed out that Trump is committed to prioritizing diplomatic solutions, but “tangoing requires two people,” so Trump is keeping all options open for various possibilities.

Over the past week, the US military has accelerated its deployment in the Middle East, sending the Lincoln Carrier Strike Group to the region, along with three missile destroyers and a carrier air wing. The air wing includes F/A-18E “Super Hornet” fighters, F-35C “Lightning II” stealth fighters, and EA-18G “Growler” electronic warfare aircraft.

Additionally, three US Navy destroyers not part of the carrier strike group are deployed in the region: USS McFaul, USS Delbert D. Black, and USS Mitscher.

(Source: Caixin Global)