Brussels, Belgium. The Middle East has entered a new phase of tension after the latest developments in contacts between the United States and Iran over a potential agreement to end hostilities. The escalation has lifted oil prices and weighed on European stock markets.
Israeli strikes in Lebanon
The flare-up follows Israeli attacks in southern Lebanon, where the Israel Defence Forces captured the medieval Beaufort Castle. Israeli Prime Minister Benjamin Netanyahu said the military advance would continue and ordered bombings in areas of Beirut.
Iran suspends communications
In response, Tehran said it was halting the exchange of messages with the United States within the framework of talks for an agreement. Iranian television later said the probability of the ceasefire between Iran and the United States ending was high unless Israel stopped its attacks in Lebanon.
Trump comments on talks
US President Donald Trump told NBC News that reports that Iran might halt negotiations with Washington would be acceptable if true. He said he believed there had already been too many discussions and that it would be better to stop talking for a period of time.
Threats over key shipping routes
Iran also threatened a full blockade of the Strait of Hormuz and the activation of other fronts, including the Bab el-Mandeb Strait, in what it described as a response to Israel and its supporters.
Markets react
The developments triggered a rise in oil prices and a decline across European stock markets. The Euro Stoxx 50 fell 0.64%, while Paris lost 0.79%, Frankfurt dropped 0.80%, Milan declined 0.81% and London fell 0.87%.
Brent crude for August delivery rose 6.60% to 97.13 dollars a barrel, while US West Texas Intermediate for July delivery increased 7.62% to 94.02 dollars.
Netanyahu expands military operations
Netanyahu said he had ordered the military to attack targets in the southern suburbs of Beirut, a Hezbollah stronghold, as Israel expands its military operations in southern Lebanon.
Iran’s state-run Tasnim News Agency reported that Iran had suspended all further diplomatic communication and messages with the United States in protest of Israel’s violation of the current ceasefire, citing Israeli strikes and military operations.