Drone strike hits Egypt LNG terminal as Middle East conflict spreads to Mediterranean

By Jana Choukeir and Ahmed Tolba

DUBAI/CAIRO, July 29 (Reuters) – Explosions hit a natural gas loading port on the Mediterranean Sea in Egypt on Wednesday, and British maritime security company Ambrey said a U.S.-owned floating storage tanker there had been hit by a drone, in a potential spread of the Middle East war.

The drone hit a vessel in the Egyptian port of Damietta, causing a fire that spread to another vessel, three trading sources familiar with the incident said.

The crew were evacuated and the fire had been brought under control, Ambrey said.

There was no immediate claim of responsibility for the incident.

Earlier on Wednesday the United States and Saudi Arabia struck Iran-backed paramilitary groups in Iraq, and U.S. President Donald Trump vowed to "beat the fucking shit" out of Iran for firing on U.S. troops days after he halted air strikes.

Iran confirmed overnight that it had fired on U.S. bases in Jordan and at ships in the Strait of Hormuz, and also spurned an Omani proposal to jointly manage the strait.

"We'll be hitting them hard," Fox News quoted Trump as saying. "We're going to beat the fucking shit out of them."

Oil prices shot up Wednesday in one of the sharpest spikes of the five-month war. Brent crude futures rose more than 8% to push the benchmark well above $90 a barrel, reversing much of a plunge earlier this week when Trump had unexpectedly halted U.S. strikes over the weekend.

The abrupt resumption of attacks only days after they were suspended saw a return to the volatile on-again-off-again pattern of earlier phases in the war. Trump had said "Operation Epic Fury" would last only a few weeks when he launched it in February but fighting has now gone on for five months with no end in sight.

The joint U.S.-Saudi attacks also mark the first time Riyadh has publicly joined strikes alongside Washington. That could widen the conflict by drawing Sunni Muslim Saudi Arabia into combat against Shi'ite proxies of Iran on a new front.

Iraq's Popular Mobilisation Forces, powerful Iran-backed paramilitary groups incorporated into the Iraqi security forces, said at least 20 members were killed and 32 wounded in U.S.-Saudi strikes targeting several bases across Iraq.

Iraqi men shouted Shi'ite sectarian slogans and "Death to America!" as they carried the bodies of slain fighters in body bags out of a hospital in Mosul in northern Iraq, footage from Iraq's Al-Ahad television showed.

Washington and Riyadh said they struck the Iran-backed armed groups in Iraq in retaliation for drone attacks on Saudi oil targets launched from Iraq.

It was the first major U.S. military action in the Middle East since last Friday, when Trump abruptly suspended an intensive bombing campaign after 13 days, having been advised by commanders that the strategy had run its course.

Though Iran denies its forces have directed strikes from Iraqi territory, Iranian newspaper Hamshahri reported that four Iranian Revolutionary Guards advisers had been killed in the strikes on Iraq.

The strikes on Iraq expose a dangerous rift in that volatile country. The Shi'ite-led government is one of the few in the world to balance close military and diplomatic ties with both Tehran and Washington, but those divided loyalties are a constant source of tension and frequent domestic unrest.

The office of Prime Minister Ali al-Zaidi, who took power just two months ago, urged the parties involved to avoid escalation and said he wanted to keep the country out of regional conflicts.

The Iraqi presidency denounced the strikes on the paramilitaries as "an unacceptable attack and a flagrant violation of Iraq's sovereignty," while also calling for a halt to attacks by armed groups against Iraq's neighbors.

Trump told Fox that the United States had coordinated with the Iraqi government in launching the attacks. An Iraqi government spokesperson did not immediately respond to a request for comment on Trump's assertion that Baghdad had cooperated.

Washington has long called on the Baghdad government to crack down on Iran-backed paramilitaries, but efforts to do so in the past have provoked unrest.

In a clear challenge to Zaidi's authority, one of the main Iran-backed Iraqi groups, Kataib Hezbollah, said it would give the government until next Thursday to prove it could defend Iraq's sovereignty.

The deep ties between Iran and Iraq, the two biggest Shi'ite-majority countries, are on display this week as hundreds of thousands of Iranian religious pilgrims head to shrines in Iraq for an annual observance of mourning for martyrs. Some carried portraits of Iran's slain Supreme Leader Ayatollah Ali Khamenei.

Hours before launching the joint attacks with Saudi Arabia on Iraq, the U.S. military said its air defenses had averted a surprise Iranian attack on U.S. troops in the region.

Jordan's military said it had shot down five Iranian missiles. U.S. bases in Jordan have lately become primary Iranian targets, where three U.S. service members were killed this month in the worst U.S. losses since March.

Iran's Revolutionary Guards said they had fired several ballistic missiles at U.S. military installations in Jordan, and had struck three tankers that were attempting to transit through the Strait of Hormuz along an unauthorized route.

Fighting resumed this month after a U.S.-Iran interim deal reached in June collapsed over the fate of the strait, the world's most important energy shipping route, which Iran says it controls and where it aims to collect fees.

(Reporting by Reuters bureauxWriting by Peter GraffEditing by Toby Chopra)