Azerbaijan’s defense ministry said Tuesday it had begun an “anti-terrorist” campaign in the disputed Nagorno-Karabakh region, as Armenian media and local authorities reported heavy bombardment of the regional capital of Stepanakert.

Two civilians, including a child, were killed, and 11 people were injured, amid shelling by the Azerbaijan military, according to Gegham Stepanyan, the Ombudsman in Nagorno-Karabakh.

Nagorno-Karabakh, an ethnic Armenian enclave that is internationally recognized as part of Azerbaijan, has been the cause of two wars between the neighbors in the past three decades, most recently in 2020.

Tensions have been simmering around the region for months, after Azerbaijani troops blockaded the Lachin corridor in December, cutting off the only road connecting Nagorno-Karabakh to Armenia and preventing the import of food to its roughly 120,000 inhabitants.

Russian peacekeepers, who deployed to Nagorno-Karabakh under the terms of the 2020 ceasefire, have been tasked with preventing a fresh conflict breaking out. But Moscow has been accused of being unable or unwilling to intervene to protect Armenia, its long-term ally, in the face of continuing aggression from Azerbaijan.

The Azerbaijani defense ministry demanded in a statement Tuesday “the complete withdrawal of ethnic Armenian troops and the dissolution of the government in Stepanakert.”

“The only way to achieve peace and stability in the region is the unconditional and complete withdrawal of the Armenian armed forces from the Karabakh region of Azerbaijan and the dissolution of the puppet regime,” it said.

“As part of local anti-terrorist measures carried out in the Karabakh region of Azerbaijan, regular long-term firing points and military installations of the Armenian armed forces were destroyed by precise strikes by units of the Azerbaijan Army,” the ministry added.

The ministry claimed its army had come under “systematic shelling” from Armenia’s armed forces, adding that its action was designed to “neutralize their military infrastructure” and “ultimately restore the constitutional order of the Republic of Azerbaijan.”

“Only legitimate military targets are being incapacitated,” it added.

It said Armenia had fortified its positions, “bringing units to a high level of combat readiness,” and that mines had been planted in previously de-mined areas. The ministry also claimed one Azeri vehicle had struck a mine and two civilians had been killed.

But Armenia’s foreign ministry rejected claims that the Armenian army was in Nagorno-Karabakh.

“Armenia’s assistance to Nagorno-Karabakh is of a humanitarian nature, the need for which is further confirmed by the humanitarian crisis caused by the illegal blockade of the Lachin corridor,” it said in a statement.

Armenian news agency Armenpress reported that Nagorno-Karabakh’s army, which is not part of Armenia’s armed forces, is “displaying ‘resolute resistance’ to the Azeri military’s attempts to advance.”

Armenian Prime Minister Nikol Pashinyan has convened a meeting of the Armenian Security Council against the backdrop of the situation in Karabakh.

Armenia’s defense ministry wrote on X, formerly known as Twitter, to deny Azerbaijan’s claims that Armenian forces had opened fire on Azeri combat outposts.

Armenian news agency Armenpress said the city of Stepanakert City was under heavy Azerbaijani bombardment, and that mobile and internet connection had been disrupted.

“Recently, the Azerbaijani side has been carrying out daily troop transfers and stockpiling of various weapons, which were accompanied by intensive information and propaganda activities, preparing the ground for large-scale aggression against Artsakh,” the Foreign Ministry of Artsakh – the local term for Nagorno-Karabakh – said in a statement.

“Now we are witnessing how Azerbaijan, in order to implement its policy of genocide, is moving towards the physical destruction of the civilian population and the destruction of civilian objects.”

CNN has been unable to verify the claims of either side in the conflict.

The previous war, which ended in a crushing defeat for the de-facto Nagorno-Karabakh state backed by Armenia’s government, lasted 44 days, before a Moscow-brokered ceasefire ended the conflict.

The deal provided for around 2,000 Russian peacekeepers to deploy to Nagorno-Karabakh to guard the Lachin corridor. But Russia’s peacekeepers did not prevent Azerbaijani troops from establishing a military checkpoint along the corridor, stopping the import of food to the enclave.

Earlier this month, Pashinyan said Azerbaijan had concentrated troops on the border with Armenia and the dividing line with Nagorno-Karabakh, and warned of a possible escalation.

“Over the past week, the military-political situation in our region has deteriorated significantly,” Pashinyan said. “The reason is that Azerbaijan has been accumulating troops along the contact line of Nagorno-Karabakh and the Armenian-Azerbaijani border for several days now.”

The European Union’s High Representative for Foreign Affairs Josep Borrell condemned the attack, saying “military escalation should not be used as a pretext to force the exodus of the local population.”

The French Foreign Ministry also slammed Azerbaijan’s aggression and said it had called for a UN Security Council meeting “to be urgently convened.”

Pashinyan’s told Armenpress that he had spoken with US Secretary of State Antony Blinken and French President Emmanuel Macron about the unfolding crisis, saying that “both sides emphasized the unacceptability of the use of force and noted the need to use international mechanisms for de-escalation.”

The Russian Foreign Ministry said it was deeply alarmed by the sharp escalation in the region.

“(The) Russian side urges the conflicting parties to stop the bloodshed, immediately cease hostilities and return to the path of political and diplomatic settlement,” foreign ministry spokeswoman Maria Zakharova said Tuesday, claiming the Russian peacekeeping contingent “continues to fulfill its tasks.”

Kremlin spokesperson Dmitry Peskov also expressed “concern about the sharp escalation of tensions and the outbreak of hostilities,” and called for Armenia and Azerbaijan to adhere to the tripartite agreements signed after the war in 2020.

But Pashinyan criticized Russia for not alerting his government about Azerbaijan’s plans to launch military action.

“We haven’t received any information from our partners in Russia about that operation,” Pashinyan was quoted by Armenpress as saying, describing this as “strange and perplexing.”

“Azerbaijan has essentially launched the ground operation to subject the Armenians of Nagorno-Karabakh to ethnic cleansing,” Pashinyan said. “We believe that the Russian peacekeeping forces should first of all take measures, and second of all we expect the UN Security Council to take measures as well.”

CNN’s Chris Liakos, Maya Szaniecki and Alex Hardie contributed reporting.

By Tsvetana Paraskova of OilPrice.com

Oil prices rose for yet another day early on Tuesday, with Brent hitting $95 per barrel, as Azerbaijan said it had launched “anti-terrorist” operations in the Nagorno-Karabakh region with mostly Armenian population.

The Azerbaijan-Armenia tensions have been rising in recent months after Azerbaijan imposed a blockade on the ethnic Armenian region also known as Artsakh by Armenians but internationally recognized as part of Azerbaijan.

Last week, for the first time in three months, Nagorno-Karabakh received aid via Azerbaijan’s Aghdam route, while Azerbaijan continues to block the Lachin corridor connecting the region to Armenia.

Today, Azerbaijan’s defense ministry said that “local anti-terrorist activities have been launched” “to disarm and secure the withdrawal of formations of Armenia’s armed forces from our territories, neutralize their military infrastructure.” Azerbaijan said Armenia’s armed forces targeted a vehicle with a land mine, killing two civilians.

Armenia, for its part, accused Azerbaijan of spreading false information in claiming that there are Armenian military, equipment and personnel in Nagorno-Karabakh. As of 2 p.m. local time on Tuesday, “the situation on the borders of the Republic of Armenia is relatively stable,” Armenia’s ministry of defense said.

Azerbaijan is an oil and gas producer and exporter and is part of the OPEC+ alliance of producers as a non-OPEC participant in the group currently withholding oil supply to the market.

While tensions in the restive Azerbaijan-Armenia region rise, oil prices were also up on Tuesday morning ET, with Brent topping $95 per barrel, the highest in 10 months, and WTI Crude up by 1.3% at $92.50.

“A 15% rally in the space of around three weeks to trade at levels not seen since last November and not far from triple figures, it’s been an impressive move and there could be more to come,” Craig Erlam, senior market analyst at OANDA, wrote in a note on Monday.