War returns to Iran with Israel, US strikes

The European Bank for Reconstruction and Development downgraded its economic forecasts Wednesday, noting that the energy price shock triggered by the Middle East war penalised Europe more than the United States, AFP reports.

“Electricity prices in Europe are also much higher than in the United States,” the London-based EBRD said in its latest outlook report, which also focused on countries in the Middle East and Africa where it invests.

The bank predicted that gross domestic product would slow to 3.1 per cent across its regions of operation this year from 3.4pc in 2025, with Europe more dependent on hydrocarbon imports than the United States.

Emerging-market central banks are leading a wave of interest-rate hikes as the war in Iran reignites inflation, moving faster than most developed-world peers, which remain on hold to assess the economic fallout, Bloomberg reports.

Since fighting began in late February, at least 10 emerging- and frontier-market central banks have raised rates, with Indonesia, Rwanda, South Africa and Sri Lanka tightening policy in the past two weeks.

Israeli artillery is targeting the town of Blat in the Marjayoun district of southern Lebanon, Al Jazeera reports.

‘It’s the tail that is wagging the dog’ aptly describes the ongoing conflict in the Middle East. The reality is that America is fighting Israel’s war. The Zionist state not only acts as a spoiler but also effectively dictates the terms of war and peace in the region. A recent example of this is Israel’s military escalation in Lebanon, which has not only complicated diplomatic efforts to resolve the US-Iran conflict, but has also broadened the theatre of war.

Despite President Donald Trump’s claims of having halted the conflict, the war continues. Israeli forces have occupied a significant portion of Lebanon, and relentless bombings have devastated Beirut, effectively undermining the US-brokered ceasefire.

Incensed by Israel’s blatant violation of the ceasefire, Iran has suspended its back-channel negotiations with the US and warned that it could “completely block” the Strait of Hormuz, aggravating tensions. Tehran asserts that any peace talks are directly linked to a ceasefire in Lebanon and Israel’s withdrawal from the region. Additionally, Iran has threatened to strike Israel if the war in Lebanon is not halted. Hours later, Trump stated that he had urged Israel to cease its offensive; however, there are no signs of an end to the hostilities.

Read more from Zahid Hussain here.

Oil prices extended gains as Middle East peace talks stuttered, though stocks mostly rose on the back of continued demand for all things linked to artificial intelligence, AFP reports.

Uncertainty about a peace deal pushed oil prices up more than one per cent, with both main contracts up around five percent this week. However, stocks extended their breathtaking rally, fuelled by the tech sector and AI demand.

Tokyo climbed more than two percent, helped by a more than 11 percent surge in chipmaker Tokyo Electron, while Advantest also jumped.

Taipei was up a similar amount thanks to Taiwan Semiconductor Manufacturing Company’s strong advance.

Shanghai, Sydney, Singapore and Manila were also up, though Hong Kong, Wellington and Jakarta retreated. Seoul was closed for a holiday.

Two tankers carrying oil products exited the Strait of Hormuz over the past week, while a liquefied natural gas carrier loaded cargo in the United Arab Emirates, shipping data showed — rare movements as traffic through the chokepoint remains limited, Reuters reports.

Aframax tanker Cy Victorious, carrying at least 80,000 metric tons (over 508,000 barrels) of high-sulphur straight-run fuel oil, exited the strait on May 30, ship-tracking data from Kpler and LSEG showed.

Another Long-Range 2 tanker Sti Elysees, loaded with clean products from Kuwait in late February, exited the strait on May 29, according to Kpler data. Its destination is unclear.

Meanwhile, the Marigold LNG tanker, managed by Abu Dhabi National Oil Company, loaded a cargo at UAE’s Das Island on May 24-25, analytics firm Vortexa said.

Japan’s cabinet approved a $19 billion supplementary budget to support households struggling with soaring everyday costs driven by the Iran war, AFP reports.

The extra budget was “decided” at a cabinet meeting, the prime minister’s office said on its website.

Top government spokesman Minoru Kihara told reporters at a news conference that the cabinet had allocated a total of 3.1135 trillion yen.

Kuwait’s military said its air defences were intercepting “hostile” missile and drone attacks, AFP reports.

“Any sounds of explosions heard are the result of air defense systems intercepting these hostile attacks,” the military said on X, without specifying their origin.

The US military has said that it had “successfully defeated” a series of Iranian missile and drone attacks in the Gulf and conducted self-defense strikes on Iran’s Qeshm Island, AFP reports.

US Central Command also denied claims by Iran’s Revolutionary Guards that they had struck the headquarters of the US Navy’s Fifth Fleet in Bahrain and a separate air base in the region.

“Iran launched several ballistic missiles toward regional neighbors; however, all failed to hit their intended targets,” Centcom said in a statement.

Centcom said an “additional wave of Iranian drones attempting to attack US forces in Kuwait failed to impact intended targets,” with several drones shot down.

The US military also shot down three attack drones that had been launched by Iran “toward civilian mariners that were rightfully transiting regional waters,” Centcom said.

Democrats have wielded harsh criticism of US President Donald Trump’s war on Iran during the hearing with Secretary of State Marco Rubio, Al Jazeera reports.

“Let’s face it, Mr Secretary, the Trump foreign policy has become a dumpster fire,” says Chris Van Hollen, a Democrat from Maryland, calling the war “stupid and reckless”.

Cory Booker, a Democrat from New Jersey and one of the most outspoken critics of the war, says Iranians were “finding ways to leverage” the “economic havoc” wrought by the Strait of Hormuz closure.

“Our adversary and our enemy who’s causing havoc in the region … has discovered, thanks to you all, the power of shutting down the Strait of Hormuz,” Booker adds. “This ill-conceived war never should have happened.”

Rafael Grossi, the head of the International Atomic Energy Agency (IAEA), has met with Qatari Prime Minister Mohammed bin Abdulrahman bin Jassim Al Thani and the country’s foreign ministry, according to Al Jazeera.

“We had an important exchange on the current situation in the region, including non-proliferation in Iran and [the IAEA’s] indispensable role. I reiterated the Agency’s commitment to working with countries across the region to strengthen nuclear safety and security and support stability,” Grossi says on X.

Vulnerable economies are most at risk as disruptions continue in the Strait of Hormuz, and these economies, which include small island nations and what the UN designates as “least developed countries”, could see oil import costs rise $20bn a year, UN Trade and Development (UNCTAD) has announced, Al Jazeera.

Together, these countries are home to nearly one billion people, with more than 30 per cent of the population living on less than $3 a day.

International Atomic Energy Agency (IAEA) ⁠chief Rafael Grossi says the agency is offering support to the United Arab Emirates during a visit to the nuclear power plant that came under a drone attack last month, according to Al Jazeera.

Grossi says Emirati authorities reacted very quickly to the attack at the Barakah Nuclear Power Plant by shutting down a reactor due to the loss of external power.

He adds that ⁠a number of activities will take place to complete repairs at ‌the plant, but has provided no further details.

The World Health Organisation (WHO) says it has verified 190 attacks on health care facilities and personnel in Lebanon over the past three months, warning that the country’s health system is coming under growing strain amid escalating violence, Anadolu.

Abdinasir Abubakar, WHO representative to Lebanon, tells reporters in Geneva that more than 3,400 people have been killed and nearly 10,400 injured since the latest Israeli escalation began in March.

“These have been among the deadliest months for Lebanon since the start of the conflict in October 2023,” the representative states, noting that the attacks on health care have killed 128 health workers and injured 332 others.

“Not only do these attacks kill and maim, they also deprive people of the health services they need, when they need them most,” Abubakar says.

US Central Command (Centcom) says American forces have redirected 122 commercial vessels and disabled five others as part of a naval blockade of Iranian ports.

US President Donald Trump has rubbished media reports claiming that Washington and Iran ceased communications, calling them “false and erroneous”.

“The conversations between us have been going on continuously,” he writes in a post on Truth Social. “Where they lead, one never knows, but as I told Iran, ‘It’s time, one way or another, for you to make a deal. You’ve been doing this for 47 years, and it cannot be allowed to go on any longer!’”

US Secretary of State Marco Rubio says that Iran’s supreme leader, Ayatollah Mojtaba Khamenei, who was wounded in US-Israeli attacks and has not been seen in public since assuming office, is alive and increasingly active, AFP reports.

“I think there are indications out there that he is increasingly engaging at some level,” Rubio tells the Senate Foreign Relations Committee.

At least four people have been killed in Israel’s latest attacks on the southern Lebanese Tyre district, Al Jazeera reports citing the state-run National News Agency.

An attack on Burj Shamali has killed two people and wounded 14, while two people were killed in an air raid on Shehour.

The Lebanese group claims it launched drones at two Israeli military armoured vehicles, as well as two tanks, in southern Lebanon, Al Jazeera reports.

The attacks unfolded, Hezbollah claims, near the town of Zawtar al-Sharqiyah, which is located just beyond the “yellow line” stretching roughly 10 kilometres north of the Lebanon-Israel border.

Hezbollah will not accept a “partial ceasefire” with Israel, a senior official from the group says, refusing to halt attacks against northern Israel in exchange for Israel sparing Beirut’s southern suburbs.

“We will not accept a partial ceasefire,” Mahmud Qomati tells AFP in a written statement, adding that “the Zionist enemy should know that any aggression against the suburbs could lead to a deeper and stronger response” from the group.

US Secretary of State Marco Rubio has told Senators that the Trump administration has not offered Iran sanctions relief in exchange just for opening the Strait of Hormuz, adding that any sanctions relief will be based on Tehran meeting conditions relating to its nuclear programme, Reuters reports.

Israeli air strikes have targeted the city of Nabatieh and the town of Nabatieh al-Fawqa in southern Lebanon, Al Jazeera correspondents on the ground are reporting.

Israeli strikes have also targeted Sultaniyeh and Bir al-Salasil, both located in the Bint Jbeil district.