Key insights
- Iran has reportedly halted communication with the US via mediators and is threatening to block critical maritime routes like the Strait of Hormuz and Bab El-Mandeb Strait. This escalation follows Israeli actions in Lebanon and retaliatory strikes between US CENTCOM and Iran's IRGC. The increased geopolitical tension and potential disruption to global trade routes pose a significant bearish risk to US equity markets, despite President Trump's optimistic statements about a potential deal.
Investing.com - Iran’s negotiating team has halted sending messages to the United States through mediators following Israeli attacks on Lebanon, Reuters reported on Monday, citing Iran’s Tasnim news agency.
Tehran has targeted completely blocking the Strait of Hormuz and activate other fronts, including the Bab El-Mandeb Strait, a critical maritime conduit which connects the Red Sea to the Gulf of Aden south of Yemen, according to Tasnim.
Israel has pushed to expand its occupation of a section of neighboring Lebanon, responding to drone launches by Iran-aligned Hezbollah militants, media reports said.
Elsewhere, U.S. Central Command said it had struck Iranian radar and command sites over the weekend, with Iran’s Islamic Revolutionary Guard Corps (IRGC) stating it attacked a U.S. base in retaliation.
The strikes, the latest in a string of attacks since last week, came even as U.S. President Donald Trump claimed that Iran "really wants to make a deal" to end their more than three-month old conflict.
Central Command (CENTCOM) said in a social media post it had attacked sites in Goruk and Qeshm island over the weekend, claiming that the strikes were done in “self-defense,” specifically after the shooting down of a U.S. drone in the region.
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Separately, the IRGC said on Monday it had attacked a U.S. base used to stage attacks on southern Iran. While the IRGC did not specify which base it had struck, Kuwait said it had intercepted missile and drone attacks on Monday.
The recent attacks marked a further straining in an already tenuous ceasefire between the U.S. and Iran, after they traded sporadic strikes over the past week.
Still, hopes remain that both sides will eventually forge a peace deal. Trump said in a social media statement late on Sunday that "Iran really wants to make a deal," and that it will "all work out well in the end."
But he did not specify whether talks were ongoing and whether a comprehensive deal to end the war and reopen the Strait of Hormuz was close. Trump and other officials have repeatedly asserted that a deal may be imminent, despite a recent flare-up in military tensions with Iran.
While U.S. and Iranian officials said indirect negotiations were ongoing, neither side had officially confirmed a deal. Media reports have suggested that the two countries are at odds over Iran’s nuclear ambitions, with Washington demanding in particular that Tehran hand over its enriched uranium holding.
Iran has continued to block the Strait of Hormuz, a vital waterway for a fifth of the world’s oil and natural gas, while the U.S. has instituted a naval blockade of Iranian ports. Oil prices rose on Monday amid expectations of continued supply disruptions.
"A U.S.-Iran peace deal has, yet again, failed to materialize despite reports that one is imminent. But, in spite of another round of tit-for-tat attacks over the weekend, market participants continue to operate on the assumption that, sooner rather than later, the Strait of Hormuz will re-open," analysts at Capital Economics said in a note to clients.
(Ambar Warrick contributed reporting)
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