Iran fires missiles and US strikes Iran facility after reports of
faltering peace talks
[June 03, 2026]
By JON GAMBRELL, SAMY MAGDY and NASSER KARIMI
DUBAI, United Arab Emirates (AP) — The U.S. military said Tuesday that
Iran fired missiles at Kuwait and Bahrain that failed or were shot down,
and that the U.S. launched strikes on an Iranian facility in response.
Iran fired missiles toward Kuwait and Bahrain, but failed to hit their
targets, the U.S. said. The two fired at Kuwait fell apart en route,
while U.S. and Bahraini forces intercepted the missiles aimed at
Bahrain.
U.S. Central Command said it responded with strikes on an Iranian
military ground control station on Qeshm Island in the Strait of Hormuz.
Iran's paramilitary Revolutionary Guard said it had targeted the
headquarters of the U.S. Navy's 5th Fleet in Bahrain and another country
in its attack, without naming Kuwait. It said it launched its attack in
response to the U.S. firing a missile into the engine room of another
oil tanker trying to reach Iran despite the U.S. blockade.
“We had previously warned that in case of aggression, the response would
be different and more severe, and we acted accordingly," the Guard said
in its statement.
Central Command also said it “downed multiple drones” launched by Iran
targeting American forces in Kuwait.
The attacks happened after Iran stopped communicating with mediators
about extending a ceasefire in the war with the U.S. and Israel,
according to reports Tuesday from two semiofficial Iranian news
agencies. President Donald Trump disputed the claim and said talks were
continuing.
The reports by the Fars and Tasnim news agencies, both believed to be
close to the Guard, came as tensions flared in Israel’s
separate-but-related fight against the Iranian-backed militia Hezbollah
in Lebanon.
A regional official involved in the mediation, speaking on condition of
anonymity to discuss the talks, told The Associated Press that Iran had
not communicated at all on Tuesday after saying that a ceasefire needed
to be enforced in Lebanon for negotiations to continue.
Trump says talks ‘going on continuously’
Trump called reports of a cessation in talks “false and erroneous.”
“The conversations between us have been going on continuously, including
four days ago, three days ago, two days ago, one day ago and today,”
Trump said in a social media post. "Where they lead, one never knows,
but as I told Iran, ‘It’s time, one way or another, for you to make a
Deal."
U.S. Secretary of State Marco Rubio did not address the reported cutoff
in communications as he testified at a congressional hearing in
Washington. Instead, he sounded an optimistic note about the nuclear
dimension of the negotiations, while cautioning that there’s no
guarantee of reaching “a deal that’s acceptable.”
Iran has been trying to increase pressure on Trump over negotiations on
the Iran war ceasefire and loosening the Islamic Republic's chokehold on
the Strait of Hormuz and the oil, gas and other commodities that
normally pass through it. Trump then could potentially push Israeli
Prime Minister Benjamin Netanyahu to halt or slow the advance of his
forces, which have moved deeper into Lebanon than at any time in over a
quarter of a century.
The conflicts have increasingly become conjoined, as Iran insists that
any potential truce in the war there must also quell the fighting in
Lebanon.
Israel and the U.S. maintain the fighting in Lebanon is separate from
the Iran war talks.
Inflation takes an economic toll on Iran
Meanwhile, year-on-year inflation in Iran reached a level in May unseen
since World War II, underlining the economic pain average Iranians are
facing. While the U.S. is eager to ease the Islamic Republic's grip on
the strait — through which a fifth of all traded oil and natural gas
passed in peacetime — Iran faces economic challenges as its oil-backed
economy remains under a U.S. naval blockade.
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A nurse looks through a shattered window of the Jabal Amel Hospital
into a destroyed building that was hit Monday in an Israeli
airstrike, in the southern port city of Tyre, Lebanon, Tuesday, June
2, 2026. (AP Photo/Mohammed Zaatari)
Economic pressure touched off nationwide protests in Iran in 2017
into 2018, when rising food prices sparked demonstrations that
killed over 20 people and saw hundreds arrested. The next year, an
increase in government-subsidized gasoline prices caused protests
that saw over 300 people reportedly killed.
Then came the protests over the collapsing value of Iran's currency,
the rial, at the start of this year. They were the most intense
demonstrations to shake the Islamic Republic since its 1979
revolution and the chaotic years that followed. Iran's theocracy met
January's protests with a crackdown on demonstrators in January that
killed over 7,000 people, according to activists' estimates.
Now, even as hard-liners hold gun-handling workshops and organize
marriages under the shadow of a ballistic missile to bolster
spirits, experts note there could be new demonstrations if people
find themselves priced out of feeding their families.
“I have no doubt that if Trump leaves (Iran without a formal peace
deal) ... most probably, we will see something like January by the
end of summer because of the economic and social situations,"
analyst Mohsen Jalilvand said in a video published by Iran's Fararu
news website.
Iran faces skyrocketing inflation
Iran's Central Bank said the consumer price index, which measures a
basket of goods and services, reached 77.2% in May compared with the
year before. The rate is 8.5% higher than in April, the bank added.
Inflation in daily and general needs — like medicine, taxi fares,
tobacco and communication fees — rose 113.8% from the year before.
A private economic think tank in Iran, the Bamdad Institute of
Economic Studies, described the current figures as “an unprecedented
rate since World War II.” Iran’s Central Bank did not acknowledge
the significance of the figures.
The previous record came in 1942. During the war, the British and
Soviets invaded Iran and took over its railway, disrupting food
supplies. The lack of food, worsened by a poor harvest, sparked
hyperinflation and a famine. Hunger and a typhus outbreak killed
many.
Airstrikes this year have greatly damaged Iran's businesses and its
oil industry, Meanwhile, the U.S. blockade has been targeting
Iranian crude oil shipments trying to reach the international
market, a key source of hard revenue. Tax revenues have been
depressed by businesses struggling even after the fighting paused.
The rial, which traded at 32,000 to $1 in 2015, now trades at over
1.7 million to $1.
“We will definitely have higher prices," Iranian President Masoud
Pezeshkian warned in May. "We are fighting, and we must accept this
hardship.”
Tehran-based economist Saeed Leilaz, speaking to the AP, warned that
annual inflation in Iran could reach 80%.
"Iran’s society cannot tolerate above 25%” annual inflation, he
said.
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