Iran suspends US talks and threatens to keep Hormuz closed over Israel's Lebanon offensive

Iran suspended its US-mediated peace negotiations on Monday, saying there would be no talks until Israel ends its operations in Lebanon and Gaza, according to the IRGC-affiliated Tasnim news agency, which said Tehran's team was withdrawing from message exchanges through mediators. Iran's Revolutionary Guards threatened to open "new fronts," keep the Strait of Hormuz closed and "activate" the Bab el-Mandeb strait off Yemen, where the Iran-aligned Houthis have targeted shipping. "Iran considers crossing the red lines in Lebanon and Gaza to mean direct war," the Guards' intelligence organisation said on state TV.

The escalation rattled markets: crude futures shot more than 5 percent higher and equities slid as the negotiations stumbled. Late on Sunday, US forces intercepted two Iranian ballistic missiles targeting American troops based in Kuwait, the US military said, adding that no personnel were harmed. A cargo vessel about 40 nautical miles southeast of Umm Qasr, Iraq, was struck by an unknown projectile, causing a large explosion, the United Kingdom Maritime Trade Operations agency reported.

The rupture followed Israel's seizure of Beaufort Castle and its return to strikes on the Hezbollah-controlled southern suburbs of Beirut; Israeli airstrikes overnight killed six people in southern Lebanon, and Israel ordered residents of seven villages to evacuate. Iran's foreign minister, Abbas Araqchi, insisted the Iran-US ceasefire covered "all fronts, including in Lebanon," writing that "violation on one front is a violation of the ceasefire on all fronts" and that "the US and Israel are responsible for the consequences." The European Union urged Israel to "stop its military escalation in Lebanon," while Lebanon's parliament speaker, Nabih Berri, told the Trump administration that Hezbollah was ready for a full and immediate ceasefire.

For all the threats over Hormuz -- mostly closed since the war began in February -- the picture on the water was mixed. President Masoud Pezeshkian told Japanese Prime Minister Sanae Takaichi by phone that Iran would "try to provide a smooth and easy passage for Japanese ships," and US Central Command has guided roughly 70 commercial vessels through the strait over the past three weeks, US officials told the New York Times.