Israeli strikes across Lebanon threaten fragile US-Iran ceasefire

After the US and Iran agreed to a two-week ceasefire, Israel struck Lebanon, jeopardizing the already fragile ceasefire deal. Responding to the strikes, Iran has again closed the Strait of Hormuz.

The escalation has raised fears of a wider conflict and disrupted global oil routes. The Strait, which carries nearly 20% of the world’s oil supply, remains tense, with tankers waiting as Iran requires ships to seek permission before passing.

President Donald Trump said US forces will stay deployed until Tehran fully follows what he called the real ceasefire, warning of stronger military action if it fails. Washington also demanded the immediate reopening of the key shipping lane.

Rising toll in Lebanon
Israeli strikes killed at least 182 people. The sharp escalation has deepened uncertainty.

But markets reacted sharply
Markets rallied after Trump signaled support for a ceasefire tied to reopening the Strait.

The S&P 500 gained 2.5%, the Dow 2.8%—its largest jump since April—with the Nasdaq seeing similar gains.

European and Asian markets also saw significant rallies, with German DAX and France’s CAC 40 rising roughly 4% to 5%.

Oil prices plunged, with US crude dropping to $95 a barrel. Diesel futures fell by more than 15% in the US and Europe.

Companies with high fuel costs, such as United Airlines and Delta Air Lines, experienced sharp gains as oil prices eased.

Lower energy prices also raised hopes that the Federal Reserve could cut interest rates later this year.

Diplomatic push continues
Vice President JD Vance will lead the US negotiating team in high-stakes peace talks with Iran on Saturday, the White House confirmed.

While fears of an immediate global oil shock have eased, analysts warn the conflict could leave lasting economic damage. Prolonged disruption would drive broad inflation, with plastics and aluminum prices already up and slow to ease.