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Middle East crisis live: Iran attacks tanker in Dubai; explosions in Tehran and Jerusalem amid wave of strikes | US-Israel war on Iran
Interim summary
For those just joining our live coverage of the Middle East war, here’s a snapshot of the latest:
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Iran attacked and set ablaze a fully loaded crude oil tanker off Dubai. Local authorities later said response teams contained the incident with no oil leakage and that no injuries had been reported
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Donald Trump warned that the US would obliterate Iran’s energy plants and oil wells if it did not open the strait of Hormuz.
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The Israeli military said four soldiers had been killed in combat in southern Lebanon, where its forces are clashing with Iran-backed Hezbollah.
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Two giant Chinese container ships have sailed through the strait of Hormuz on their second attempt to leave the Gulf after turning back on Friday, ship-tracking data shows. The transit signals a diplomatic breakthrough between Beijing and Tehran as Iran widens its list of approved nations for transiting the vital route, Lloyd’s List reported.
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Indonesia’s foreign minister called for an emergency UN security council meeting and a thorough investigation” into a “heinous attack” after three UN peacekeepers from Indonesia were killed in southern Lebanon.
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Blasts were heard in Tehran and power cuts hit some areas of the capital, Iranian media reported on Tuesday. Israel earlier carried out missile strikes on what it called military infrastructure in Tehran and infrastructure used by Hezbollah in Beirut.
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Japan and Indonesia agreed to step up coordination on energy security, Japanese PM Sanae Takaichi said on Tuesday.
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Two Iranian missile launches targeted central Israel, Israeli media reported, with the emergency service saying it had not received reports of any injuries.
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Turkey reported a ballistic missile launched from Iran had entered Turkish airspace before being shot down by Nato air and missile defences.
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An earlier summary of key developments is here.
Key events
The UAE’s defence ministry posted to X about half an hour ago saying that its air defences were intercepting Iranian missile and drone attacks – and said this activity explained the sounds audible across various parts of the country.
A US-Israeli attack on the Iranian city of Mahallat last night (at about 11pm local time) killed 11 people and injured 15 others, the Tasnim news agency has cited a deputy security officer as having said.
Four residential units were “completely destroyed” in the attack, in which three children were killed, according to the report, which we have not yet been able to independently verify.
Iranian parliamentary committee approves plan to impose tolls on strait of Hormuz – state media
Iranian state media reported yesterday that an Iranian parliamentary committee had approved a proposal to collect a toll on vessels travelling through the strait of Hormuz.
The strait will be closed to ships from the US, Israel and countries that have been involved in sanctioning Iran, according to a Telegram post from the Fars news agency, which said that Iran will have a “sovereign” role in the implementation of the new system.
The proposal, approved by Iran’s parliament security committee, would reportedly require agreement from other countries next to the strait. It is not clear how much the toll on vessels will be.
The US president, Donald Trump, warned yesterday that if a deal was not struck with Iran – including to reopen the strait of Hormuz shipping lane – US forces would destroy “all of their Electric Generating Plants, Oil Wells and Kharg Island (and possibly all desalinization plants!)”.
The strait’s closure has sent global energy prices soaring, including in the US where residents are being hit hard by surging gas prices and farmers face higher fertiliser costs and falling commodity prices.
Two container vessels belonging to the Chinese shipping giant Cosco have successfully passed through the strait of Hormuz as they have exited the Gulf, ship tracking data indicates.
The two vessels were the CSCL Indian Ocean and the CSCL Arctic Ocean. They passed close to the Iranian-controlled island of Larak and are bound for Port Klang in Malaysia.
Iran has effectively blocked the vital waterway but allowed a trickle of ships through from nations it deems “non-hostile”, such as Thailand, China, Pakistan and India.
Saudi Arabia’s defence ministry has said it has intercepted and destroyed ten drones over the past hours, and eight missiles launched towards the Riyadh area and the country’s eastern region.
Early this morning Kuwait said its air defences were responding to hostile missile and drone attacks. Neither Saudi Arabia nor Kuwait said where the drones or missiles came from.
Interim summary
For those just joining our live coverage of the Middle East war, here’s a snapshot of the latest:
-
Iran attacked and set ablaze a fully loaded crude oil tanker off Dubai. Local authorities later said response teams contained the incident with no oil leakage and that no injuries had been reported
-
Donald Trump warned that the US would obliterate Iran’s energy plants and oil wells if it did not open the strait of Hormuz.
-
The Israeli military said four soldiers had been killed in combat in southern Lebanon, where its forces are clashing with Iran-backed Hezbollah.
-
Two giant Chinese container ships have sailed through the strait of Hormuz on their second attempt to leave the Gulf after turning back on Friday, ship-tracking data shows. The transit signals a diplomatic breakthrough between Beijing and Tehran as Iran widens its list of approved nations for transiting the vital route, Lloyd’s List reported.
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Indonesia’s foreign minister called for an emergency UN security council meeting and a thorough investigation” into a “heinous attack” after three UN peacekeepers from Indonesia were killed in southern Lebanon.
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Blasts were heard in Tehran and power cuts hit some areas of the capital, Iranian media reported on Tuesday. Israel earlier carried out missile strikes on what it called military infrastructure in Tehran and infrastructure used by Hezbollah in Beirut.
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Japan and Indonesia agreed to step up coordination on energy security, Japanese PM Sanae Takaichi said on Tuesday.
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Two Iranian missile launches targeted central Israel, Israeli media reported, with the emergency service saying it had not received reports of any injuries.
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Turkey reported a ballistic missile launched from Iran had entered Turkish airspace before being shot down by Nato air and missile defences.
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An earlier summary of key developments is here.
Here are some of the latest images coming in from the Middle East in week five of the war.
Macron due in Japan for talks dominated by Iran war
French president Emmanuel Macron arrives in Japan on Tuesday for a visit that initially aimed to strengthen partnerships in nuclear energy and space innovation but will now be dominated by the Middle East war.
Macron will hold talks with prime minister Sanae Takaichi on Wednesday and “the crisis in the Middle East will be at the heart of discussions”, the Élysée Palace said ahead of the trip.
It added that the two leaders would discuss “how we can try to find common solutions”, reports Agence France-Presse.
Japan depends on the Middle East for 95% of its oil imports and has had to dip into strategic stockpiles to temper the impact of rising fuel prices since the start of the war.
Economy and finance ministers of G7 countries, which include France and Japan, said on Monday they stood ready to take “all necessary measures” to ensure the stability of the energy market as they tackled the economic consequences of the war.
Israel finishes ‘another wave’ of strikes in Tehran
The Israeli military says it has “just completed another wave of strikes” targeting Iranian regime infrastructure in the heart of Tehran.
The post on social media also said the military “continues to deepen the damage” to the infrastructure.
No oil leakage after Kuwaiti oil tanker attack – authorities
Dubai response teams have successfully contained the incident involving a Kuwaiti oil tanker in Dubai waters with no oil leakage, authorities say.
The Dubai media office also reiterated no injuries were reported.
Earlier on Monday Iran reportedly carried out a drone attack that set ablaze to a fully loaded crude oil tanker in Dubai waters, while the ship’s owner warned of a possible oil spill.
Japan and Indonesia have agreed to step up coordination on energy security, Japanese prime minister Sanae Takaichi said on Tuesday.
“In light of the Iran situation, the strategic importance of resources and energy security is once again being recognized globally. Indonesia is a major resource-rich nation,” Takaichi said alongside Indonesian president Prabowo Subianto after they met for talks in Tokyo.
The summit came as the US-Israeli war on Iran squeezes oil and gas supplies vital to Asia.
Indonesia is the world’s biggest exporter of thermal coal for power generation, supplying about half of global exports, Reuters reports. It is also a major liquefied natural gas exporter, with roughly a quarter of its shipments bound for Japan.
More now on three UN peacekeepers from Indonesia being killed in two incidents in southern Lebanon: Indonesia’s foreign minister has called for an emergency UN security council meeting and “for a swift, thorough and transparent investigation” into the “heinous attack”.
Sugiono made the call on Tuesday in a post on X after speaking with UN secretary António Guterres.
Israel’s military said it was aware of the reports regarding the two incidents and they were being reviewed thoroughly to determine whether they resulted from the military’s activity or Hezbollah’s.
Two peacekeepers were killed on Monday after an explosion from an unknown origin destroyed their vehicle near Bani Hayyan in south Lebanon, the UN peacekeeping force (Unifil) said. Another Indonesian soldier was killed overnight into Monday when a projectile exploded near one of the group’s positions close to the southern Lebanese village of Adchit al-Qusayr.
In response to the first death, Indonesia’s foreign ministry said on Monday the deceased peacekeeper was one of its citizens and that three others were injured by “indirect artillery fire”.
Indonesia condemned the incident and said any harm to peacekeepers was unacceptable, while reiterating its condemnation “of Israel’s attacks in southern Lebanon”.
Guterres said attacks on peacekeepers were grave violations of international humanitarian law and may amount to war crimes.
Four Israeli soldiers killed in southern Lebanon – IDF
The Israeli military said on Tuesday four soldiers had been killed in combat in southern Lebanon, where its forces are clashing with the Iran-backed Hezbollah.
A military statement named three soldiers from the same battalion who “fell during combat” and a separate statement said another soldier – who had not yet been publicly named – had died in the same incident, Agence France-Presse is reporting.
Another soldier was severely wounded and a reservist moderately wounded, a second statement said.
Opening summary
Hello and welcome to our continuing live coverage of the US-Israel war on Iran and its impact on the region, the world and the global economy.
Iran attacked and set ablaze a fully loaded crude oil tanker off Dubai on Monday while Donald Trump warned the US would obliterate Iran’s energy plants and oil wells if it did not open the strait of Hormuz.
The apparent strike on the Kuwait-flagged Al-Salmi is the latest in a string of assaults on merchant vessels by missiles or explosive air and sea drones in the Persian Gulf and the strait of Hormuz since the US and Israel attacked Iran on 28 February.
Crude oil prices briefly spiked anew after Kuwait’s state news agency reported the attack on the tanker, which can carry around 2m barrels of oil worth more than $200m at current prices.
Kuwait Petroleum Corp, the ship’s owner, said work was under way to assess damage and warned of a possible oil spill. Authorities in Dubai later said they had brought the fire under control after a drone attack on the tanker, and that no injuries were reported.
In other key developments:
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Blasts were heard in Tehran and power cuts hit some areas of the capital, Iranian media reported on Tuesday. Israel earlier carried out missile strikes on what it called military infrastructure in Tehran and infrastructure used by Iran-backed Hezbollah in Beirut, leaving black smoke hanging over the Lebanese capital.
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Two successive Iranian missile launches targeted central Israel, the Times of Israel reported, quoting the emergency service as saying it had not received any reports of injuries.
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Turkey reported a ballistic missile launched from Iran had entered Turkish airspace before being shot down by Nato air and missile defences.
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Oil prices were headed on Tuesday for a record monthly rise while Asian shares were headed for their steepest fall since 2022, capping a tumultuous month as the war fanned fears of higher inflation and slower growth. Bonds were headed for their largest decline in months, while the dollar recorded its strongest gain in eight months.
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The US national average retail price of fuel crossed $4 a gallon for the first time in more than three years on Monday, data from price-tracking service GasBuddy showed, as tightening global supplies pushed US crude prices above $101 a barrel.
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Three UN peacekeepers from Indonesia were killed in two separate incidents in southern Lebanon.
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Thousands of soldiers from the US Army’s elite 82nd Airborne Division have started arriving in the Middle East, two US officials told Reuters. , as part of a reinforcement that would expand Trump’s options to include the deployment of forces inside Iranian territory, even as he pursues talks with Tehran.
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The White House later said talks with Iran were progressing and Trump wanted to reach a deal with Tehran before a 6 April deadline he set last week after extending an earlier deadline he had set for Iran to open the largely blocked strait of Hormuz oil route.
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Trump had told aides he is willing to end the military campaign against Iran even if the strait or Hormuz remains largely closed and leave a complex operation to reopen it for a later date, the Wall Street Journal later reported.
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Iran said on Monday it had received US peace proposals via intermediaries and that they were “unrealistic, illogical and excessive”.
The man said his home has been targeted three times in the last five months.
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UK News
European stock markets hit record high and oil price falls to three-month low after US-Iran peace deal – business live | Business
European stock markets hit record high
European stock markets have hit a record high at the start of trading, as relief over the US-Iran peace deal ripples across global markets.
The pan-European Stoxx 600 index has jumped by 0.9% to 639 points, over the previous record high set just before the Iran war started, with shares rising in London, Frankfurt, Paris, Madrid and Milan.
Mining and travel companies are driving the rally, while oil company shares are sliding.
That follows sharp gains in Asia-Pacific markets overnight, where Japan’s Nikkei surged by 5% on hopes that the strait of Hormuz will reopen within days.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, says global equity markets are starting the week firmly on the front foot after President Trump announced that a deal with Iran had been reached, adding:
The move has given investors a clear reason to dial back some of the geopolitical risk premium that has hung over markets, especially as the Strait of Hormuz is expected to reopen and oil prices move sharply lower.
Energy prices have been one of the clearest transmission channels from Middle East tensions into inflation, bond yields and equity sentiment, and there is likely to be a concerted effort to get prices down even further once this deal is finalised.
There are still details to be ironed out before markets can fully trust the agreement, but for now the direction of travel is clear: lower oil, calmer nerves and a renewed appetite for risk.
Key events
Peace deal should keep mortgage rates down
Mortgage borrowers can breathe a sigh of relief at the news of a peace deal in Iran, says Adam French, head of consumer finance at Moneyfactscompare.co.uk.
While we are far from being out of the woods yet, a lasting peace deal should dramatically reduce the risk of the Bank of England’s worst-case scenario for inflation and interest rates becoming a reality.
“Under that scenario, Base Rate could have risen to 5.25%, potentially pushing typical rates on new mortgages towards 6.75%. Instead, today’s news means mortgages rates, which have already been slowly falling for several weeks, have likely already passed their peak – at least until the next unwelcome crisis.
“Borrowers can be optimistic but with a word of caution, as inflation and economic data will continue to influence the outlook. However, a lasting peace should remove one of the biggest risks to mortgage costs and may help restore a more stable environment for hard-pressed remortgage borrowers and prospective buyers.”
Even before this morning’s drop in UK bond yields (see earlier post), average mortgage rates have dipped slightly.
Moneyfacts reports:
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The average 2-year fixed residential mortgage rate today is 5.61%. This is down from 5.62% the previous working day.
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The average 5-year fixed residential mortgage rate today is 5.58%. This is down from 5.59% the previous working day.
Why it may take months for oil flows to return to normal
Donald Trump excitedly declared: “Ships of the World, start your engines. Let the oil flow!” last night, but the reality is that it will take some time for oil flows through the strait of Hormuz to return to pre-war levels.
One reason is that many oil tankers are simply in the wrong place, after the long closure of the strait.
Another is that some production and refining facilities have been damaged by the conflict, while others were mothballed after storate facilities filled up to the brim.
A third factor is that insurers could still be wary of the conflict reigniting, and price their cover accordingly.
Neil Shearing, group chief economist at Capital Economics, explains:
Even if ships now have safe passage, tankers are in the wrong place, oil production/refining facilities need to get up to full capacity, and questions over the cost and availability of insurance for ships traversing the Strait will remain.
Our current working assumption is that ~80% of energy flows will resume by the end of Q3. Natural gas flows will be slower to return, following the damage to Qatari facilities earlier in the conflict, which according to local officials has put 17% of production offline for two to three years.
US crude drops below $80
US crude oil has dropped to its lowest level since the second week of the Iran war.
The cost of a barrel of West Texas Intermediate (WTI) light sweet crude has dropped by 6% today to $79.72 per barrel, the first time since 10 March that it has been under $80/barrel.
That could help to pull down US gasoline prices, which climbed after the conflict began, hitting consumer confidence.
UK bond yields fall
Today’s relief rally is also driving up government bond prices, pushing down the cost of borrowing.
The yield (or interest rate) on 10-year UK government debt has dropped by 6.5 basis points (0.065 of a percentage point) to 4.775%.
Two-year bond yields are down 8bps to 4.16%.
Lower bond yields indicate that that the cost of issuing new government debt has fallen, which will be a relief for the UK Treasury after the Iran war drove up borrowing costs.
Copper mining company Antofagasta is now the top riser on the FTSE 100, up almost 8%.
Trader will be concluding that an end to the Iran war will boost the world economy, leading to more demand for raw materials such as copper.
European stock markets hit record high
European stock markets have hit a record high at the start of trading, as relief over the US-Iran peace deal ripples across global markets.
The pan-European Stoxx 600 index has jumped by 0.9% to 639 points, over the previous record high set just before the Iran war started, with shares rising in London, Frankfurt, Paris, Madrid and Milan.
Mining and travel companies are driving the rally, while oil company shares are sliding.
That follows sharp gains in Asia-Pacific markets overnight, where Japan’s Nikkei surged by 5% on hopes that the strait of Hormuz will reopen within days.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, says global equity markets are starting the week firmly on the front foot after President Trump announced that a deal with Iran had been reached, adding:
The move has given investors a clear reason to dial back some of the geopolitical risk premium that has hung over markets, especially as the Strait of Hormuz is expected to reopen and oil prices move sharply lower.
Energy prices have been one of the clearest transmission channels from Middle East tensions into inflation, bond yields and equity sentiment, and there is likely to be a concerted effort to get prices down even further once this deal is finalised.
There are still details to be ironed out before markets can fully trust the agreement, but for now the direction of travel is clear: lower oil, calmer nerves and a renewed appetite for risk.
BP and Shell’s shares slide
Shares in oil companies are falling, though – BP and Shell are both down 3.7%, as investors anticipate an end to their earnngs boost from the Iran war.
FTSE 100 index hits eight-week high
Boom! Britain’s stock market has hit a near-two month high at the start of trading, as investors welcome the breakthrough between the US and Iran to end the Middle East conflict.
The FTSE 100 blue-chip share index has jumped by 99 points, or almost 1%, at the start of trading to 10,570 points, its highest level since 21 April.
Engineering firm Rolls-Royce, which makes and services jet engines, is the top riser on the FTSE 100, up 5.5%, followed by British Airways parent company IAG, up 4.8%.
UK house prices dip in June
Gwyn Topham
Two bits of good news for Britons who don’t own their homes have been revealed, with data showing a drop in house prices in June as well as fewer tenants facing rent hikes last month.
Figures from Rightmove showed the average price of property coming on the to market fell by 0.6% or £2,113 to £376,191, the biggest June fall in fourteen years, with prices 0.5% below this time in 2025. The biggest drops were seen in southern England and Wales, and in asking prices for flats rather than houses.
The property site said the number of homes for sale was still at historically high levels for summer, making it more of a buyer’s market. Mortgage affordability has also improved slightly this month, with the average two-year fixed rate deal dropping about 0.1 percentage points to 5.07%, it said.
Meanwhile, figures suggest that the introduction of the Renters Right Act may already be seeing results in terms of keeping rents down for tenants.
The new law came into force at the start of May and means landlords can only increase rents for sitting tenants once a year. According to Hamptons monthly lettings index, the number of tenants who saw their rent rise was down 23% from the same month last year. Hamptons said if the rest of the year saw similar change, it would expect only 31% of sitting tenants to face increases, compared to 40%-50% in previous years.
However, the agency warned that rent rises in Scotland, where landlords have been operating under a similar system for longer, exceeded the national average. Sitting tenants who faced rent rises had an average increase of 5.4% in May, but the figure reached 7.7% in Scotland, albeit for a lower absolute rent – £952 – than the Great Britain average of £1375.
Speaking of the ECB, their president Christine Lagarde has been warning that inflation pressures are spreading in the euro area.
In an intervew with broadcaster France Culture, Lagarde warned that high energy prices are starting to feed through to other parts of the economy, saying:
“Indirect effects of inflation, we have absolutely started to see that more or less everywhere in recent weeks.”
The US-Iran agreement is well-timed for the Bank of England, which is due to set UK interest rates on Thursday.
If the strait of Hormuz does reopen, and oil flows return towards pre-war levels, there will be less inflationary pressure – and thus less need for interest rate rises.
The European Central Bank raised its interest rates last week, but this week is the turn of the BoE, the US Federal Reserve and the Bank of Japan.
Kathleen Brooks, research director at XTB, says:
Over the past month, the price of oil is down by more than a fifth, and the Brent crude price is now back at levels from early March. This is good news for inflation, which should start tumbling monthly from June, and it could ease concerns about price pressures as we lead up to some major central bank action this week. The decline in the oil price also raises questions about whether the ECB was too hasty in raising rates last week.
European stock markets are on track to jump when trading begins, in just over 20 minutes.
Germany’s DAX share index is up 1.65% in the futures market, Reuters reports, with the UK’s FTSE 100 0.75% higher.
The US dollar is weakening, as investors shift into riskier currencies.
The pound is its highest in over a week, at $1.3438.
Markets rally across Asia
There are strong gains across Asia-Pacific markets today, as investors welcome the deal between the US and Iran.
Japan’s Nikkei share index has leapt by 5%, as has South Korea’s KOSPI, while China’s CSI300 index is 1.9% higher.
Jim Reid, market strategist at Deutsche Bank, says:
Whilst the deal is very good news for markets it looks like tough conversations will have occur in the 60-day window to ensure the peace is sustainable. As an example, the Senate needs to approve any extensive sanction relief for Iran.
For now the can kicking exercise has been very well received by markets even after a strong US close on Friday where hopes were raised of a weekend signing
Introduction: Oil falls to three-month low
Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.
The peace deal agreed between Iran and the US is sending a wave of relief through the markets today.
Oil has tumbled 4%, and markets across the Asia-Pacific region have jumped, as investors anticipate the reopening of the strait of Hormuz.
Although it is unclear exactly what has been agreed – with the final text of their memorandum of understanding unpublished – Donald Trump’s claim that “oil will flow on both ends again for the region, and the world” is pushing down energy prices – a relief for busineses, consumers, politicians and central bankers alike.
Brent crude has fallen as low as $83.04, its lowest since 10 March, after the prime minister of Pakistan announced the US and Iran will sign a memorandum of understanding in Switzerland on Friday.
That still leaves Brent above its pre-war price of $72.48 a barrel, though.
Trump has indicated that the opening of the strait is contingent upon the signing of the peace deal, scheduled for Friday.
Iran’s Mehr state news, though, reported that the agreed memorandum of understanding calls for the reopening of the strait within 30 days under “Iranian arrangements” – an indication that Tehran hasn’t surrendered its control of the waterway.
Chris Weston of IG points out that there are still obstacles to overcome:
The probable reopening of the Strait of Hormuz later this week would represent a significant positive development. Markets had increasingly questioned how long inventory draws could offset supply disruptions and whether physical dislocations would begin weighing more heavily on risk assets. The focus now shifts towards understanding what normalisation of logistics could realistically look like, and how quickly shipping volumes can return to pre-conflict levels of 120 to 140 commercial vessels transiting eastbound and westbound each day.
There are still obstacles to overcome. Mines may need to be cleared, and there may be structural damage to refineries and export facilities around the region that will take time to repair and come back to pre-conflict capacity.
The agenda
Paying tribute, Sir Keir Starmer said Lord Hattersley “was a giant of the Labour movement”.
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