War returns to Iran with Israel, US strikes

The pound fell for a second day against the euro and made little headway against the dollar, as doubts about the likelihood of peace in the Middle East made traders cautious, reports Reuters.

The nearly 7 per cent drop in the oil price this week has given some respite to the currencies of more import-dependent nations, which include sterling, but overall, trading ranges have been narrow and volatility has been contained, reflecting a lack of conviction among investors.

Iran’s intelligence ministry said that the goal of the United States and Israel remained to overthrow the Islamic republic and break up the country, reports AFP.

“The enemy is now pursuing through other means the objective of overthrowing and partitioning the country, which it openly declared at the beginning of the recent war but failed to achieve through military attack,” the ministry said in a statement carried by Iranian media.

Hezbollah said its fighters clashed with Israeli forces in a town north of the Litani river, a day after Israel’s military said it was expanding its ground operations, reports AFP.

Israel intensified the scope of its strikes on south and east Lebanon on Tuesday despite a ceasefire, killing at least 31 people, Lebanese authorities said, as Hezbollah also kept up its attacks.

In a statement, the resistance group said its fighters “clashed with the enemy forces at point-blank range” with light and medium weapons in the town of Zawtar al-Sharqiyah, on the edge of an Israeli-declared “yellow line” in south Lebanon where its troops have been operating.

Israel has issued a fresh forced displacement order to residents of Nabatieh in southern Lebanon, reports Al Jazeera.

In a post on X, the Israeli army’s Arabic-language spokesperson instructed residents to “evacuate your homes immediately and move north of the Zahrani River”.

Seoul has said it would summon Iran’s ambassador to protest after a probe concluded that a strike on a South Korean ship in the Strait of Hormuz was “highly likely” an Iranian-made missile, AFP reports.

“Our government plans to summon the Iranian ambassador to explain the investigation results, convey a strong protest regarding the attack on our vessel, and demand responsible measures, including steps to prevent a recurrence,” first vice Foreign Minister Park Yoon-joo said during a briefing.

The Iran war and lingering trade tensions could dent euro zone economic growth, push up borrowing costs and challenge some member states’ ability to sustain public budgets, a European Central Bank report concluded.

Financial markets have mostly shrugged off the war in Iran, leaving stocks at rich valuations, corporate borrowing costs low and the spread between sovereign bond yields across the 21-nation bloc at low levels, raising fears that investors may be complacent about risks.

“A scenario of notably weaker growth associated with a more persistent energy shock could trigger a reassessment of fiscal sustainability and an abrupt repricing in sovereign bond markets,” the ECB said in a biannual Financial Stability Report.

Such a repricing could then raise corporate borrowing costs, setting off a feedback loop that could endanger financial stability and hit the real economy.

This risk is especially acute because governments are already financing a long list of urgent projects, limiting their fiscal buffers and their room to manoeuvre.

“High sovereign financing needs related, among other things, to defence spending, the green transition and potential fiscal measures to cushion households and firms from rising energy prices, are likely to add to pressures over the medium term,” the ECB added.

An Iranian Revolutionary Guards official has said that renewed war with the United States was unlikely but warned that Iran stood ready against any attack, AFP reports.

“The possibility of war is low because of the enemy’s weakness, the armed forces are lying in wait with full magazines,” said Mohammad Akbarzadeh, deputy political chief of the Islamic Revolutionary Guard Corps Navy, was quoted by Tasnim news agency as saying.

“Do not doubt that we will turn the area from Chabahar to Mahshahr into a graveyard for aggressors,” he said, naming places at each end of Iran’s lengthy southern coast.

British energy bills are set to rise this summer, the sector regulator announced on Wednesday, as the Middle East war drives wholesale gas prices higher, reports AFP.

Energy market regulator Ofgem said the price cap that suppliers can charge customers will increase by 13 per cent from July, adding around 18 ($24) per month to the average bill.

A typical annual bill for gas and electricity will rise to about 1,862 per year, Ofgem, which sets the cap every quarter, said in a press release.

The regulator cited “volatility in global energy markets” as a reason for the unusual summer increase, a period when energy demand is typically lower.

“Higher wholesale gas prices, driven by ongoing conflict in the Middle East, is impacting the price we pay for energy,” said Ofgem chief executive Tim Jarvis.

An Israeli airstrike has killed two people and injured another in Deir Aames, Lebanon’s National News Agency reported.

Lebanon’s Health Ministry has described the strikes since yesterday as a series of “massacres,” saying at least 31 people were killed and 40 others wounded.

Tabriz International Airport in northwestern Iran is expected to reopen today, according to Iran’s IRIB broadcaster, which cited a spokesperson for the country’s Civil Aviation Organization, Al Jazeera reported.

The airport will join around 20 other terminals across the country that have already resumed operations following disruptions caused by the US-Israeli conflict, according to the agency.

Oil prices pulled back from recent highs, erasing some of the previous day’s 4 per cent gain as traders sought clarity on complex negotiations between Iran and the US after renewed hostilities set back efforts to reopen the Strait of Hormuz, reports Reuters.

Brent crude futures fell $1.42, or 1.43pc, to $98.16 a barrel as of 0253 GMT, while US West Texas Intermediate (WTI) crude lost $1.66, or 1.77pc, to $92.23 a barrel.

Deputy Prime Minister and Foreign Minister Ishaq Dar, in a meeting with UN Secretary General Antonio Guterres, discussed regional developments, including Pakistan’s efforts for “peace and stability” in the Middle East.

In a post on X, the Foreign Office said that two leaders also discussed “a range of important issues, including UN Security Council reform, Jammu and Kashmir dispute, Afghanistan, and Palestine”.

“Secretary-General Guterres highly appreciated Pakistan’s active engagement and contributions to international peace and security, and UN’s broad agenda,” the FO added.

Ten Indian sailors, detained in Iran in July 2025 on an oil tanker, have been released after “sustained diplomatic engagement”, India’s shipping authorities have said, AFP reports.

The sailors on the MV Harbour Phoenix were “detained, arrested and imprisoned in Iran following the vessel’s interception near Jask Port in July 2025”, the Directorate General of Shipping said in a statement.

“The seafarers have now been released and reunited safely,” the shipping authority said.

“Necessary arrangements are being coordinated for the earliest return of the crew members to India.”

The United Arab Emirates has welcomed a statement from the UN Security Council expressing “grave concern” about a May 17 drone attack on its Barakah nuclear power plant, Al Jazeera reports.

“The Council has spoken in unity: there must be an immediate and permanent cessation of all attacks against civilians and civilian infrastructure in the UAE, including attacks and threats of attack against peaceful nuclear facilities,” the UAE’s mission to the UN said in a post on X.

The mission also called for those responsible for “act of aggression – including those acting through proxy networks” to be held accountable.

Explosions have been reported in Lebanon’s capital, Beirut and its surrounding areas, Press TV reports.

Pro-Israel US Democratic Senator Cory Booker has said that President Trump’s approach to negotiations has significantly strengthened Tehran’s position, Al Jazeera reports.

In a US media interview, Booker said that the current strategy has completely backfired.

“That’s why this war is wrong. He’s got us in a situation that’s worse than it was before. A more extreme regime, Strait of Hormuz now is a leveraging point for them,” he said.

“This weak nation has put America in stalemate and Donald Trump is being played as fool what he is, for getting us into this in the first.”

Qatar’s Prime Minister and Foreign Minister Mohammed bin Abdulrahman bin Jassim Al-Thani has spoken with UAE National Security Adviser Sheikh Tahnoun bin Zayed Al Nahyan and Saudi Arabia’s Foreign Minister Faisal bin Farhan bin Abdullah Al Saud by telephone, the Qatari foreign ministry has said in two separate statements, according to Al Jazeera.

During the calls, they reviewed bilateral relations and Pakistan’s mediation efforts between the US and Iran.

The Qatari official has expressed the importance of supporting the ongoing mediation efforts to reach a “lasting peace agreement” and stressed the need for all parties to respond positively to those efforts.

Elbit Systems, Israel’s largest ⁠defence ⁠firm, has reported higher quarterly profit boosted by strong global demand for ⁠military equipment, Al Jazeera reports.

Revenue has grown to a record $2.2 billion from $1.9bn, with a backlog of orders reaching $30.2bn. The increase in the quarter is mainly coming ⁠from Israel and ⁠Asia.

Elbit adds ⁠that it received a $1.4bn contract from an unnamed European customer for “extensive military modernisation programmes” ‌that will be performed over five years.

The Israeli company says it earned $3.87 per diluted share in the first quarter, excluding one-time items, up from $2.57 a year earlier and well above expectations.

At least 3,213 people have been killed by Israel in Lebanon since March 2, according to the country’s health ministry, Al Jazeera reports.

A further 9,737 people have been wounded, the ministry said in its latest bulletin.

China’s Foreign Minister Wang Yi has expressed hope that parties in the Iran conflict can stay committed to pursuing a ceasefire and continue to meet each other halfway, Reuters reports.

Wang spoke to reporters at the United Nations in New York after chairing a meeting of the 15-member Security Council, because China holds the council’s presidency in May.