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So end of turn, during turn I moved Italian ships and subs into E med, but now I dont get the option to stay at sea, the only option is to go back to Taranto, the Enf and Fra ships can move down a spot and stay, but not Italy, Is it because they are not at war with a major?

Yes, a "neutral" needs to go back to base every turn if not in the World war, except for convoys. That's also the reason wht you cannot move more than one ship a time in a naval move.

TY