A Panama-flagged tanker carrying approximately 2 million barrels of Iraqi fuel oil was struck by a drone in Iraqi territorial waters on Wednesday, bringing the intensifying US-Iran conflict closer to Iraq’s vital southern energy-export terminals.

The New Andros was hit at around 6:00 a.m. local time, according to Reuters and Iraqi port authorities. The strike sparked a fire aboard the vessel, but Iraqi rescue teams were able to extinguish the flames.

All 22 crew members were reported safe, with no injuries.

The incident represents a growing threat to Iraq’s oil-dependent economy, which relies heavily on exports from southern terminals and maritime shipping routes through the Arabian Gulf and the Strait of Hormuz.

The attack comes amid a sharp escalation in regional hostilities and the most serious disruption to commercial shipping since the US-Iran conflict began six months ago.

Iran said on Wednesday that it had targeted 10 vessels in the Strait of Hormuz, following US attacks that destroyed five Iranian oil tankers. The US strikes came in response to Iranian ballistic missile attacks on a US Navy destroyer.

Several other commercial vessels have reportedly been damaged or attacked in the northern Arabian Gulf and the Gulf of Oman, raising concerns that merchant shipping and Iraqi oil exports could increasingly become casualties of the widening conflict.

Shipping traffic through the Strait of Hormuz has already declined significantly. Preliminary data from Kpler showed that only six cargo tankers with active tracking systems passed through the strait on Tuesday, compared with a 10-day average of 12.

The waterway is one of the world's most important energy corridors, carrying nearly one-fifth of global oil and liquefied natural gas supplies before the conflict intensified.

Tensions have also spread across the wider Gulf region. Iran-aligned Houthi forces launched large-scale drone and missile attacks on Saudi Arabia this week, targeting southern areas and oil facilities. Saudi officials said the attacks injured 73 people.

For Iraq, the strike on the New Andros underscores the vulnerability of relying heavily on southern maritime export routes during a regional crisis.

Baghdad has recently accelerated plans to develop alternative oil-export pipelines through Turkey and toward Syria’s Mediterranean coast, seeking to reduce dependence on routes exposed to disruption around the Strait of Hormuz.

The latest escalation has also sent shockwaves through global energy markets. Brent crude rose above $100 a barrel on Wednesday, reaching that level for the first time since July.