War returns to Iran with Israel, US strikes

An Israeli air strike has targeted the town of Zrarieh al-Sharqiya in southern Lebanon, Al Jazeera reports.

Iranian Foreign Minister Abbas Araghchi will travel to Beijing for talks, the foreign ministry said, amid stalled negotiations with the United States to end the Middle East war, AFP reports.

“During the visit, he will meet his Chinese counterpart (Wang Yi) to discuss bilateral ties and regional and international developments,” the ministry said in a brief statement.

Espressing concern over the current military escalation, Saudi Arabia says it supports Pakistan’s “mediation and diplomatic efforts to reach a political solution that prevents the region from sliding into further tension and instability, which would not serve the interests of the region and the world”.

The kingdom also stressed the “importance of restoring freedom of international maritime navigation” in the Strait of Hormuz to its pre-war state, and called for ensuring the safe passage of vessels without restriction.

Iraq has offered term buyers May-loading Basrah crude at steep discounts for loading inside the Strait of Hormuz, which has been largely blocked since the Iran conflict began, Reuters reports.

The OPEC producer is offering its flagship Basrah Medium crude at discounts of $33.40, or $26 a barrel to its May official selling price, for loading on May 1 to May 10 or May 11 to May 31, respectively, according to a May 3 notice from state oil marketer SOMO seen by Reuters.

The US dollar has changed little as markets weighed developments in the Iran war, while the yen steadied in muted trade after suspected intervention by Tokyo last week sparked sharp gains, Reuters reports.

The dollar index, which measures the US currency against six units, was steady at 98.44 after rising 0.3pc yesterday. The euro last fetched $1.1691, while sterling was at $1.3538.

“The market, I think, is very, very aware that the news flow can change very quickly and this could go either way. And I think that’s why the market is in this sort of holding pattern,” Jane Foley, head of FX strategy at Rabobank, said.

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Hezbollah said it targeted Israeli soldiers and vehicles in the strategic coastal area of Biyyada, while also striking a tank with a drone in the town of al-Qaouzah, Al Jazeera reports.

In a further update, the group said it struck Israeli bulldozers in the towns of Deir Siryan and Rashaf.

Gold prices rose from a five-week low hit in the previous session, although gains were limited as elevated crude oil prices kept inflation fears alive and clouded the US interest rate outlook, Reuters reports.

Spot gold rose 0.5 per cent to $4,543.87 per ounce by 0757 GMT, after a more than 2pc drop on Monday. US gold futures for June delivery were up 0.5pc at $4,554.10.

“Prices seem to be digesting a bit after the return of the ‘war trade’ across markets sent gold lower Monday,” said Ilya Spivak, head of global macro at Tastylive.

Iranian state media IRIB, citing maritime tracking data, has claimed that “at least three Iran-linked vessels” have crossed the Strait of Hormuz since the US’s “Operation Freedom” began in the key waterway.

IRIB listed the vessels as Darya, NOOH GAS, and XAVIA.

Iran’s internet blackout has entered its 67th day after passing 1,584 hours, according to NetBlocks.

Brent crude futures has retreated but holds near $114 a barrel following fresh hostilities in the Middle East, according to Reuters.

Brent crude futures eased 93 cents, or 0.8 per cent, to $113.51 per barrel at 0719 GMT after settling up 5.8pc a day ago. US West Texas Intermediate (WTI) crude falls $2.16, or 2pc, to $104.26, after gaining 4.4pc in the previous session.

“Prices continue to trade in a highly volatile range, driven largely by ongoing tensions in the Strait of Hormuz,” said Phillip Nova’s senior market analyst Priyanka Sachdeva.

“While prices have eased slightly in recent sessions, this is not due to any real improvement in fundamentals, but rather a temporary relief after the US launched ‘Project Freedom’,” she added.

India’s Petronet LNG expects Qatar to resume operations at its liquefied natural gas facilities within three to four weeks of the Middle East crisis ending, its head of finance, Saurav Mitra, said during an analyst call, Reuters reports.

Petronet hopes the crisis will end soon. “We are confident that maybe from the first week of June, the entire supply will come as per the annual delivery plan,” Mitra said.

He added that Petronet is in talks with Qatar regarding the delivery of cargoes hit by the Iran war in 2027.

Prime Minister Shehbaz Sharif has condemned last night’s missile and drone attacks targeting civilian infrastructure in the United Arab Emirates.

In a post on X, he expressed “full solidarity” with UAE President Mohamed bin Zayed Al Nahyan, stating: “Pakistan stands firmly with our Emirati brothers and sisters, as well as with the government of the United Arab Emirates at this difficult time.”

He further emphasised that “it is absolutely essential that the ceasefire be upheld and respected, to allow necessary diplomatic space for dialogue leading to enduring peace and stability in the region”.

The Iranians are saying that the Americans have attacked civilian boats and killed five civilians, Al Jazeera reports.

They are denying that the boats that the Americans claim to have hit belong to Iran’s IRGC. Rather, they are saying they were civilian boats.

They are also saying that the US destroyers attempted to enter the Strait of Hormuz and their radar was off.

Once the radar was on, they were detected because the naval forces of Iran are monitoring the region, and once they were identified, the Iranian naval forces engaged them, and warning shots were fired.

These warning shots included combat drones, missiles and rockets, and, as a result, they are saying the US destroyers were forced to turn away.

They are also making clear warnings, saying any further attempt by the US naval forces to enter the Strait of Hormuz is going to be regarded as a violation of the ceasefire.

European Council President Antonio Costa has joined other world leaders in expressing solidarity with the UAE following missile and drone strikes on its civilian infrastructure. Al Jazeera reports.

“These violations of sovereignty and international law are unacceptable and need to stop,” Costa wrote on X.

Anwar Gargash, adviser to the UAE’s president, has called Iran the “aggressor party”, Reuters reports.

He said Iran was responsible for exacerbating the crisis in the Gulf, and was the source of danger and threat to its security and stability.

He said the UAE appreciated messages of solidarity from the Gulf, Arab, and international communities.

Thailand has approved a $12.2 billion emergency borrowing package to cushion the economic impacts of the war, marking one of the country’s largest borrowing plans in decades, AFP reports.

The cabinet has said the funding would be used to boost domestic spending and ease economic hardships as inflation rises and growth slows, with the finance ministry last week cutting its GDP growth forecast to 1.6 per cent, from 2.4pc last year.

It will also be used to support alternative energy, Finance Minister Ekniti Nitithanprapas said at a news conference after a cabinet meeting.

Prime Minister Anutin Charnvirakul called the loan “a tool to move the country forward and prevent economic weakening”.

“We will get through this crisis together,” he told reporters.

The Israeli military has issued more forced displacement orders for the residents of southern Lebanese towns, specifically Jabsheet and Sarafand, Al Jazeera reports.

Residents have been told to evacuate “immediately and move away from the villages and towns for a distance of at least 1,000 metres (0.62 of a mile) to open areas”.

Anyone who remains near what the Israeli military called “Hezbollah elements, facilities and combat” are endangering their lives, it said.

Iran’s Parliament Speaker Mohammad Ghalibaf has said that a “new equation in the Strait of Hormuz is in the process of being solidified”.

“The security of shipping and energy transit has been jeopardised by the United States and its allies through the violation of the ceasefire and the imposition of a blockade,” he said on the social media platform X.

South Korea has said it will “review its position” on joining US operations in the Strait of Hormuz after President Donald Trump urged Seoul to take part following an apparent Iranian attack on one of its ships, AFP reports.

Trump said the incident should prompt South Korea to join American efforts to guide stranded ships through the strait, a major artery for the fuel exports that Seoul relies on.

South Korea’s defence ministry says it would “carefully review our position”, but did not commit to any change.

Seoul would consider its stance based on international law, the safety of international maritime routes, its alliance with the United States, and the security situation on the Korean peninsula, the ministry said.

It added that it had been “actively participating in international discussions on cooperation to ensure safe passage through the Strait of Hormuz”.

Denmark’s freight giant Maersk said that one of its ships has successfully sailed through the Strait of Hormuz under US escort, AFP reports.

The ship, US-flagged Alliance Fairfax, had been stuck in the Gulf since the war erupted in February and was “offered the opportunity” to leave accompanied by the US military.

“The vessel subsequently exited the Persian Gulf accompanied by US military assets” on May 4, the company said in a statement.

“The transit was completed without incident, and all crew members are safe and unharmed” it added.

Saudi Arabia’s non-oil private sector swung back to growth in April as output and new business rebounded from the Iran war disruption in March, but the related price pressures accelerated sharply and shipping problems continued to weigh, a survey showed, Reuters reports.

The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) rose to 51.5 in April from 48.8 in March. A reading above 50.0 separates growth from contraction.

Domestic demand drove an acceleration in new order growth, but firms reported delays in client spending and investment decisions. The new orders subindex rose to 51.5 in April from March’s 45.2 reading. New export orders fell at the fastest rate since the survey began in August 2009.

A fire broke out on several commercial vessels at a dock in Iran’s southern port of Dayyer, semi-official Mehr news agency reported, according to Reuters.

It added that firefighters were working to contain the blaze and the cause of the incident was unknown.

The Indian Ministry of External Affairs has stated that the attack on the United Arab Emirates that resulted in injuries to three of its nationals was “unacceptable”.

“We call for the immediate cessation of these hostilities and the targeting of civilian infrastructure and innocent civilians,” it said. It also called for free and unimpeded navigation and commerce through the Strait of Hormuz.

“India stands ready to support all efforts for a peaceful resolution of issues,” it said.

South Korea’s Blue House has convened a meeting led by Presidential Chief of Staff Kang Hoon-sik to discuss the fire on a Korean-operated ship in the Strait of Hormuz, MoneyToday reported, according to Reuters.