War returns to Iran with Israel, US strikes

US President Donald Trump has warned Iran to “better get smart soon”.

In a post on Truth Social, Trump said, “Iran can’t get their act together. They don’t know how to sign a [non-nuclear] deal”.

“They better get smart soon,” he added.

US Defence Secretary Pete Hegseth will face tough questions from lawmakers about the Iran war during his first testimony to Congress since the start of the conflict, AFP reports.

Hegseth’s appearance before the House Armed Services Committee — for a hearing on President Donald Trump’s $1.5 trillion defence budget request — comes with the war still unresolved and the economic fallout from it continuing around the globe.

“Finally, Secretary Hegseth will come before the House Armed Services Committee this week. It is time to answer for this war of choice,” Representative Maggie Goodlander, a Democratic member of the committee, said in a post on X.

Israel has launched an air strike on the town of Ghandouriyeh in southern Lebanon, Al Jazeera reports.

The ceasefire in Iran and Lebanon must hold through diplomatic efforts, says European Commission President Ursula von der Leyen, Al Jazeera reports.

She added, “Our goal is to see a permanent end to the war and the restoration of full freedom of navigation in the Strait of Hormuz without the imposition of fees”.

She maintained that any peace deal “must address Iran’s nuclear and ballistic missile programme,” adding that the “repercussions of the war in the Middle East could affect economic security in Europe”.

Israeli forces have launched a drone attack on the town of Burj Qalaouiyah in southern Lebanon, Al Jazeera reports.

The report came as the Israeli military said it intercepted a “suspicious aerial target” in the airspace near its forces in southern Lebanon.

British travel company Jet2 reported a 7.7 per cent rise in summer bookings from a year ago, but warned that uncertainty from the war limited its outlook for seat occupancy in the peak summer travel season, Reuters reports.

The holiday package provider noted that 87pc of its summer jet fuel requirements were hedged amid the jet fuel crisis.

Panama reaffirmed the “neutrality” of its canal and the “need to preserve” maritime transit routes amid the blockade of the Strait of Hormuz during the Middle East war, reports AFP.

Panamanian Foreign Minister Javier Martinez-Acha reasserted the canal’s neutrality during a phone call with his Israeli counterpart, Gideon Saar.

The two ministers discussed the international situation “marked by tensions in the Middle East,” according to a statement by Panama’s foreign affairs ministry.

Martinez-Acha emphasized “the importance of the Panama Canal’s neutrality as a pillar of global trade” and highlighted “the need to preserve stability in key maritime and energy transit routes.”

Traffic through the Panama Canal has increased from around 34 ships a day in January to up to 50 ships arriving daily now, according to the canal’s administrators.

Iran’s UN envoy Amir Saeid Iravani has warned the UN Security Council that Israel remains a persistent and serious threat to regional and international peace, citing Tel Aviv’s ceasefire violations and attacks on civilian infrastructure, Mehr News Agency reports.

The Iranian envoy said that achieving genuine collective security in West Asia requires a unified response that directly addresses the main source of instability, which is the occupying regime of Israel.

“The Security Council must act decisively to compel Israel to fully uphold the ceasefire in Lebanon, immediately halt all attacks against civilians and civilian infrastructure, and withdraw all its occupying forces,” he said.

Japan’s prime minister said a Japanese-related vessel has safely passed through the Strait of Hormuz and exited the Persian Gulf, calling it a positive development amid concerns over maritime security.

She said the vessel cleared the strait on April 29 and is now heading towards Japan, with three Japanese crew members on board.

The prime minister added that Japan has repeatedly urged Iran to help ensure the early restoration of free and safe navigation through the Strait of Hormuz for vessels of all countries, including Japan, and that she had conveyed this position directly to President Masoud Pezeshkian.

She added the government would continue engaging with Iran to ensure that remaining Japanese-related vessels, as well as those of other countries, can transit the strait safely.

Lloyds Banking Group reported its first quarter profit rose 33 per cent, beating analysts’ forecasts, as increased lending income offset a 151 million pound ($204 million) charge it took to reflect a deterioration in the economic outlook due to the Iran conflict, reports Reuters.

Lloyds said the war in the Middle East could hurt Britain’s economy as well as global growth, and trigger a rise in the unemployment rate, causing the lender to downgrade some of the scenarios that it uses to calculate future potential losses.

Malaysia’s treasury has ordered all government ministries and agencies to cut their operating budgets for 2026 due to the impacts of the Middle East conflict, according to a government directive reviewed by Reuters.

The directive, sent by Treasury Secretary-General Johan Mahmood Merican, said a sharp spike in energy prices stemming from the conflict has had a direct impact on living costs, causing a rise in subsidy needs to be met by the government.

The government’s public subsidy bill was expected to reach 58.4 billion ringgit ($14.79 billion) this year, far surpassing the 15 billion ringgit originally allocated under the 2026 budget, Johan Mahmood said in the internal document.

The Israeli military has published an update on its attack on southern Lebanon from yesterday, claiming its forces killed three Hezbollah fighters and bombed the group’s infrastructure across the region, Al Jazeera reports.

It confirmed strikes on several areas beyond the area it intends to control in southern Lebanon, north of the “Yellow Line”.

It said in one case an Israeli soldier was “lightly wounded and evacuated”.

Oil prices eased from a multi-day rally as investors digested the ramifications of the United Arab Emirates’ surprise decision to quit OPEC, though supply disruptions from the stalemated Iran war support the market, reports Reuters.

Brent crude futures for June dipped 1 cent to $111.25 a barrel by 0413 GMT, having climbed for the previous seven sessions.

The June contract expires on Thursday and the more active July contract down 28 cents at $104.12.

Israeli forces launched air strikes on the town of Hanine at dawn, destroying several houses, reports Al Jazeera.

The attacks follow earlier Israeli strikes on the town of Naqoura, where explosions were heard overnight, as well as air raids and gunfire reported in the town of Khiam.

The Israeli military said two soldiers were wounded in an attack by two fighters in southern Lebanon.

It claimed that one of the attackers was killed while the other was arrested, and the injured soldiers were evacuated for medical treatment.

Australian consumer prices surged in the first quarter as war in the Middle East drove up energy costs, while core inflation stayed uncomfortably high for policymakers, keeping pressure on for a rate hike next week, reports Reuters.

The consumer price index (CPI) jumped 1.4 per cent in the first quarter, the sharpest rise since late 2023, data from the Australian Bureau of Statistics showed on Wednesday. Annual CPI inflation accelerated to 4.1pc in Q1, from 3.6pc.

The key trimmed mean measure of core inflation, which excludes the most volatile items like fuel, increased by 0.8pc in the quarter, just under forecasts of a 0.9pc gain. The annual pace picked up to 3.5pc, from 3.4pc, and further above the Reserve Bank of Australia (RBA) target band of 2pc to 3pc.

“Today’s CPI print, the first to partially reflect the Strait of Hormuz closure, points to a rate hike from the RBA next week,” said Stephen Smith, partner at Deloitte Access Economics.

“That rate hike is not guaranteed, but Australia’s starting point for inflation heading into this crisis likely leaves the central bank with little choice.”

Still, the lower-than-expected trimmed mean provided some relief as price pressures were not as bad as feared, traders said.

The Australian dollar slipped 0.2pc to $0.7170, while three-year government bond yields came off earlier one-month highs to be off 2 basis points at 4.70pc.

US Treasury Secretary Scott Bessent has warned financial institutions not to fund what he calls Iran’s “shadow banking system”.

In a post on X, he said, “Iran’s shadow banking system serves as a critical financial lifeline for its armed forces, enabling activities that disrupt global trade and fuel violence across the Middle East.”

Commenting on the US Treasury Department’s imposition of sanctions on 35 Iranian entities and individuals overseeing Iran’s “shadow banking” networks, the secretary said, “Illicit funds funneled through this network support the regime’s ongoing terrorist operations, posing a direct threat to US personnel, regional allies, and the global economy.”

“Financial institutions are on notice: Any institution that facilitates or engages with these networks is at risk of severe consequences,” he added.

Yemen’s Houthi rebels have condemned the US’s “piracy” in the Gulf of Oman, saying the attacks on Iranian commercial vessels and the detention of their crews violate international law, according to Al Jazeera.

In a statement, the Houthi foreign ministry said the US’s actions have forced the world to pay a heavy price, by disrupting supply chains and shipping, and increasing the price of food and fuel.

However, it supported Iran’s restrictions in the Strait of Hormuz, affirming “the right of states to self-defence and to restrict navigation in their territorial waters to counter security threats”.

The statement also warned that “Yemen is not neutral regarding the ongoing attacks against Iran, Lebanon and Palestine”, adding that its position remains “clear, public, and explicit in this regard”.

Iran’s ambassador to the UN, Amir Saeid Iravani, has called on the UN Security Council to “act decisively to compel Israel to fully uphold the ceasefire in Lebanon”, Al Jazeera reports.

The council should also ensure that Israel “immediately halt all attacks against civilian and civilian infrastructure and withdraws all its occupying forces” from Lebanon, Iravani said.

Oil prices have risen according to Reuters, extending a multi-day rally, on reports the US will extend its blockade of Iranian ports, likely prolonging supply disruptions from the key Middle East producing region.

Brent crude futures for June rose 52 cents, or 0.47 per cent, to $111.78 a barrel at 01:54 GMT (6:54am PKT), climbing for an eighth day. The June contract expires on Thursday and the more active July contract was at $104.84, up 0.4pc.

US West Texas Intermediate (WTI) futures for June rose 57 cents, or 0.57pc, to $100.50 a barrel after gaining 3.7pc in the previous session, climbing for seven out of the last eight days.

“The recent rise in oil prices has been driven by the Strait blockade. If Trump is prepared to extend the blockade, supply disruptions would worsen further and continue to push oil prices higher,” said Yang An, an analyst at Haitong Futures.

Lebanese President Joseph Aoun has condemned an Israeli attack that killed three civil defence personnel while they performed a rescue mission for people wounded in an earlier strike, Al Jazeera reports.

“This attack is an addition to a series of assaults targeting relief and first aid workers, which demonstrates that Israel continues to violate international laws and charters that protect civilians, paramedics, civil defence, and Red Cross personnel,” Aoun said, according to the state-run National News Agency.

US President Donald Trump has instructed aides to prepare for an extended blockade of Iran, the Wall Street Journal reports according to Reuters, citing US officials.

In recent meetings, Trump opted to continue squeezing Iran’s economy and oil exports by preventing shipping to and from its ports, the report said, adding that he believed that his other options, including resuming bombing or walking away from the conflict, carried more risk than maintaining the blockade.

Reuters could not immediately verify the report.