Israel strikes Lebanon as end of US-Iran ceasefire looms

BEIRUT – Lebanon saw its deadliest day of fighting in months, as Iran and the US appeared to be at a standstill in negotiations ahead of the Aug 17 expiration of their ceasefire agreement.

The Israel Defense Forces (IDF) said on Aug 16 it killed Abu Hassan Alaa, a senior Hezbollah commander, in southern Lebanon a day earlier.

A total of 11 people died in the Israeli strikes, including several children, making these the deadliest since the sides agreed to a ceasefire at the beginning of June.

Israeli Prime Minister Benjamin Netanyahu said the strikes were in retaliation for a Hezbollah attack injuring three soldiers early on Aug 15. Israel said on Aug 16 it would strike the Iranian proxy group again should it feel threatened.

The fighting on the periphery of the Iran war may further complicate what appear to be deadlocked negotiations between Washington and Tehran ahead of the nominal end of their own June ceasefire on Aug 17.

Iran has long argued that Israeli attacks on Lebanon violate the agreement.

Central to the stalled talks is control of the Strait of Hormuz, through which a fifth of the world’s oil and gas transited before the war.

Iran and Oman appear to be finalising a “shipping map” as part of a broader agreement on how to govern traffic in the strait. The US is not involved in those talks and is unlikely to agree to terms that don’t restore free passage through the waterway.

Iranian Foreign Minister Abbas Araghchi said an agreement with Oman would not translate into the strait’s reopening and is separate from discussions with the US.

Although Iran is in contact with mediators from Qatar and Pakistan, who are passing messages between Tehran and Washington, “this does not constitute negotiation”, Araghchi said on Telegram on Aug 15. “We have not yet made a decision to resume negotiations with the US.”

The price of Brent crude rose almost 6 per cent last week as a number of vessels were attacked in and around the strait, further dashing hopes of a quick resolution to the impasse that has disrupted the flow of oil and other key commodities to global markets.

The UK Maritime Trade Operations said on Aug 15 that it was notified of a projectile striking the hull of a bulk carrier.

Separately, two Abu Dhabi National Oil vessels were struck while transiting Hormuz on Aug 13, with another hit on Aug 14, according to reports from the United Arab Emirates’ state-run WAM news.

The attacks follow about 65 confirmed incidents involving vessels in the strait between early March and Aug 11 that resulted in at least 17 deaths, according to the International Maritime Organization.

Iran’s calculus

US President Donald Trump, facing a shortfall of key munitions and mounting domestic opposition to an expanded military campaign, is readying new economic measures to force Tehran to capitulate.

He told Fox News on Aug 14 the US plans to hit Iran’s economy hard and he did not care if the conflict ends before the November US midterm elections, which will hinge on voter perceptions of the economy.

In a speech on Long Island on Aug 14, Trump said a US blockade of Iranian ports was a “wall of steel” that enabled Washington to effectively govern Hormuz. “Pretty soon I’ll be declaring the Hormuz Strait a territory of the United States,” he said.

Iran’s economy has already taken a major hit, with much of its industrial capacity damaged and crude exports severely curtailed by the US blockade. Waves of sanctions have failed, however, to force it to bend on its nuclear programme or relinquish control over the strait.

It is unclear what additional measures the US could implement without resorting to secondary sanctions.

China buys more than 90 per cent of Iranian oil, but sanctioning Beijing would likely spark retaliatory action, risking blowback on the US economy and even more uncertainty on global energy prices.

“Unless the president decides to prioritise addressing the Iran threat over all other issues, and namely China, it’s unlikely any action they take is going to materially change Iran’s calculus,” Bloomberg Economics analyst Chris Kennedy said.

Meanwhile, volatility tied to the US-Iran conflict continues to extend.

Citing a military official, Iran’s state-run IRNA reported on Aug 15 that Doha has for months barred an Iranian delegation from investigating the fate of three pilots who crashed in Qatar earlier in the war.

“We categorically deny the claims circulating regarding the detention of Iranian pilots,” the spokesman for the Qatari Ministry of Foreign Affairs wrote in a post on X late on Aug 15. He added that Doha was “surprised by these misleading statements at this particular time, amid the ongoing diplomatic efforts and initiatives aimed at de-escalating tensions in the region”.

Israel also continues to clash with Hamas operatives in Gaza in addition to Hezbollah, while the Houthis have attacked ships in the Red Sea. All three groups are backed by Iran.

The attacks between Hezbollah and Israel threaten to derail a US-brokered ceasefire between the Israeli and Lebanese governments that provides for Hezbollah’s disarmament.

It also envisions the IDF eventually withdrawing from territory it has occupied, and that the Lebanese army will step in to maintain security. BLOOMBERG