Iran Strikes Kuwait Airport, Reaches Ceasefire MOU With US

The day's dominant tension was the coexistence of active warfare and active diplomacy. Iranian missiles and drones struck Kuwait's international airport on Wednesday, according to state news agency KUNA, causing damage to facilities, flight suspensions and diversions. India's foreign ministry confirmed that one Indian national was killed and several others were injured. US Central Command said several Iranian ballistic missiles aimed at Kuwait had fallen short or been intercepted, and that US personnel and assets in Kuwait and Bahrain were unharmed. Separately, CENTCOM said it had shot down five Iranian attack drones and struck a ground control station in the port of Bandar Abbas on the same day. Iran also claimed its forces had fired warning shots at US warships in the Gulf of Oman; CENTCOM denied the claim, saying: 'Doing so would be a gross violation of the ceasefire. U.S. forces continue to operate freely in regional waters while fully enforcing the ongoing blockade against Iran.' The exchanges were the most intense single-day escalation since the Pakistan-mediated ceasefire announced on April 8.

And yet, as those exchanges were unfolding, negotiators from both sides announced a tentative memorandum of understanding to extend the ceasefire by 60 days and open a new phase of formal negotiations aimed at permanently ending the war. Al Jazeera and Axios reported that the framework still requires President Donald Trump's final approval. The proposed deal covers freedom of navigation through the Strait of Hormuz, Iran's nuclear and ballistic missile programme, reconstruction and sanctions, and a long-term peace settlement. IAEA Director General Rafael Grossi said Thursday that discussions with Iran are moving toward a preliminary nuclear framework, though the main obstacle to full verification remains inconsistent inspector access since the February strikes. On Iran's 60 percent enriched uranium stockpile, Grossi said several technically feasible options exist -- exporting it, diluting it, or placing it under IAEA control -- but described them as ultimately political decisions. The combination of ground-level strikes and senior-level MOU talks reflects a pattern that has held since April: both governments simultaneously signalling willingness to use force and to negotiate, with neither side willing to be seen conceding first.

The WFP confirmed on June 5 that the war's cumulative economic damage has crossed the threshold its March projections identified as catastrophic. Jean-Martin Bauer, director of the WFP's food and nutrition analysis service, told AFP: 'The closure of Hormuz is translating into increased hunger.' With oil prices sustained above $100 per barrel since February 28, the agency estimates that 45 million more people are facing acute hunger on top of the 320 million already food insecure globally before the conflict began. The WFP is serving 1.5 million fewer people per month than before the oil price shock, with its Somalia pipeline already broken. Bauer warned that if the $100-per-barrel price is sustained for six months, the cumulative impact rises to 9 million additional people falling into the most severe hunger categories. The WFP's March projections, described as its 'pessimistic' scenario, are now tracking as the base case.

On the domestic economy, the May jobs report landed significantly stronger than expected. The Bureau of Labor Statistics said the US added 172,000 jobs in May, against the 105,000 economists had forecast. The unemployment rate held at 4.3 percent. Leisure and hospitality businesses created 70,000 of those positions, a sharp jump from the average monthly increase of 14,000 over the prior year, as pubs, bars and restaurants accelerated hiring ahead of the FIFA World Cup, jointly hosted by the US, Mexico and Canada. Food and drink establishments alone contributed 48,000 positions. Local government hiring added 55,000, while healthcare also contributed positively; employment in the financial sector declined.

The report immediately shifted rate expectations. The probability of a Federal Reserve rate hike by year-end jumped to nearly 70 percent, with traders pricing more than a 60 percent chance of a move by October and above 98 percent by December's meeting. Federal Reserve Bank of Cleveland President Beth Hammack said the report showed the labor market is 'in balance' and that it may soon be appropriate to raise rates. The Fed is still expected to hold at its upcoming June meeting. Morningstar analysts cautioned that tepid wage growth and an unchanged unemployment rate suggest the labor market has merely stopped weakening rather than accelerating, complicating the case for a pre-emptive hike. The report added a second inflationary signal alongside the war-driven oil and food squeeze, compressing the Fed's room to hold rates through the second half of the year.