U.S. forces struck Iran’s southern coast and Iran hit American bases across the region in the biggest exchange of fire between Washington and Tehran since July. Iran accused the United States of hitting a wedding party, while U.S. officials said they were aware of the reports and denied targeting civilians. The exchange rattled markets, pushed oil prices higher and deepened fears that war could expand again.

An aerial view shows the apparent point of impact on the roof of a building that Iranian media said was hit by a U.S. strike while a wedding celebration was taking place there, in Kuhestak, southern Iran, Sept. 2. AP-Yonhap

WASHINGTON/DUBAI — Iranians and their Arab neighbours feared a return of war on Wednesday after the biggest exchange of fire between Tehran and Washington since July, with U.S. forces striking Iran's southern coast and Iran firing at American bases across the region.

The United States threatened more devastating strikes. Iran accused Washington of hitting a wedding party, killing four people and wounding dozens. Its health minister later said 18 people in total had been killed and 108 injured in the latest wave of U.S. strikes.

Asian and European stocks tumbled after the airstrikes, though Wall Street opened higher as investors focused instead on AI developments. Oil prices were marginally firmer in a volatile session that had earlier seen them hit levels not reached since July, amid concerns over the impact of the war on the global economy.