Iran scraps Trump peace talks over Israeli strikes on Lebanon, sending markets lower

Israeli attacks across southern Lebanon killed at least 16 people on Saturday, including two children, only hours after news of a ceasefire surfaced. Lebanon’s National News Agency said seven others were still buried beneath debris after strikes hit Nabatiyeh and surrounding villages.

Lebanon’s Health Ministry later said more than 4,000 people have now died in the latest conflict between Israel and Hezbollah.

Mediators continued trying to stop the violence after Friday’s intense fighting left at least 47 people dead in Lebanon and killed four Israeli soldiers.

An Israeli military official said Hezbollah launched more than 50 projectiles toward Israeli troops stationed in southern Lebanon overnight. The official was not named because Israeli military rules did not allow it.

Israel’s army said it responded by hitting dozens of Hezbollah positions and fighters, including command facilities in the south.

On Friday, Israeli Ambassador to Washington Yechiel Leiter said Israel was ready to begin an immediate ceasefire, provided Hezbollah stopped fighting and followed the agreement.

Hezbollah said on Saturday that it had accepted the truce but accused Israel of breaking it several times on Friday night. Its military wing said it would continue observing the ceasefire while defending against any further Israeli attacks.

Iranian Foreign Ministry spokesperson Esmail Bagahei said Tehran’s delegation was heading to Switzerland mainly to press the United States to carry out what it had already promised.

Esmail said discussions on a permanent settlement would not start until Iran was satisfied that the most important parts of the temporary agreement were being respected. He warned that failure to do so could put the entire memorandum at risk.

In Washington, U.S. Vice President JD Vance said Jared Kushner and Steve Witkoff, the two senior American negotiators, had already arrived in Switzerland. They were working through the practical details needed before talks on Iran’s nuclear program could begin.

JD told Fox News that he expected to travel there within the next few days, while noting that arranging the meeting remained a sensitive and complicated process.

Pakistan was also trying to get direct negotiations moving again. Pakistani Interior Minister Mohsin Naqvi met Iranian Foreign Minister Abbas Araghchi in Tehran earlier on Saturday, officials in Islamabad said.

The latest dispute added another layer of uncertainty for the global economy, especially around energy supplies and shipping through the Strait of Hormuz.

After Iran announced that it had closed the waterway, the U.S. military said commercial vessels were still passing through on Saturday. It counted 55 merchant ships carrying large volumes of goods and more than 17 million barrels of oil toward international markets.

The military did not say exactly when those crossings happened during the day.

Commercial traffic had started returning after Washington and Tehran signed their temporary agreement earlier in the week, though several parts of the arrangement still remain unresolved.

Commercial movement through the Strait of Hormuz is beginning to recover after the U.S. and Iran started reopening the waterway. Shipping data from Kpler shows that at least 20 oil tankers have made the crossing since the process began.

Thursday was the busiest day for tanker activity since June 2, though the volume remains far below what was normal before the war. More than 100 vessels previously used the strait each day, with oil tankers making up several dozen of those crossings.

Kpler recorded 25 ships moving through Hormuz on Thursday. That figure covered tankers as well as cargo ships, container vessels and other types of commercial traffic.

The increase followed the U.S. Navy’s decision to lift its blockade of Iran. Tehran has also introduced a 60-day period during which vessels can use the route without paying transit fees.

U.S. Vice President JD Vance said Iran had continued to meet the terms of its commitment so far.

The day’s tanker movement included three Saudi Arabian supertankers and one from the United Arab Emirates. These vessels are known as very large crude carriers, or VLCCs, and each can transport as much as 2 million barrels of oil.

Iranian oil ships are also becoming visible again. Several supertankers have switched their tracking signals back on after disabling them during the conflict. Kpler said five Iranian VLCCs carrying crude were seen leaving the region on Friday.

The firm said vessels were now moving both into and out of the area, showing that Iran’s oil shipments were gradually moving closer to their usual pattern.

Of Thursday’s crossings, 18 ships followed the lane set by Iran. Only one vessel used the route established by the International Maritime Organization, while Kpler could not verify which path the remaining six ships took.

Israel and Hezbollah have reached a ceasefire that is due to take effect at 4 p.m. local time on Friday, a senior U.S. official said.

The agreement was put together by negotiators from the United States and Qatar, with Iran also helping to bring both sides together.

The official said the truce was now in place following the latest exchange of fire between Israel and Hezbollah earlier on Friday.

The oil markets became jittery Friday following yet another round of talks that did not happen between the United States and Iran as there was uncertainty whether the interim pact could evolve into a permanent peace accord.

Brent crude for August delivery fell 0.45% to $79.49 per barrel, while WTI for July delivery declined 0.31% to $76.36 per barrel.

Switzerland’s foreign ministry confirmed that the negotiations planned for Friday at Bürgenstock would no longer go ahead. The White House also said Vice President JD Vance had canceled his trip to Switzerland because logistical issues surrounding the meeting remained unresolved.

JD said on Thursday that tankers carrying more than 12 million barrels of oil had passed through the Strait of Hormuz overnight. He added that Iran had avoided firing at ships in the waterway for a second consecutive night and was continuing to respect its commitment.

Meanwhile, OPEC Secretary General Haitham Al Ghais said the group does not see global oil demand reaching a peak anytime soon. Haitham also dismissed the International Energy Agency’s prediction that the market could face a supply glut in the future.

Asian equities closed the trading day with mixed performance. The Nikkei 225 of Japan rose by 0.28% to 71,250.06 after hitting a record high during the previous trading day on Thursday. The Topix Index declined by 0.57% to close at 4,044.96.

Kospi Index of South Korea lost 0.13% to 9,052.42 while the Kosdaq index dropped 3.43%. Samsung Electronics reversed its gains and finished the day 2.34% lower, while SK Hynix increased 2.94%.

The S&P/ASX 200 index of Australia closed at 8,828.7 after losing 0.92%. Trading in the U.S., China, Hong Kong and Taiwan remained suspended due to holidays.

In Europe, the Stoxx 600 was last trading nearly 0.1% higher, recovering from an earlier decline as gains in energy and healthcare shares helped contain losses elsewhere.

There was some pressure on UK government bonds following new figures that public borrowing hit the highest level in May since 2019.

The UK has seen a budget deficit of £23.3 billion or $30.8 billion, which sent the yields on the 10-year gilt up by over 7 basis points to 4.8247%.

Meanwhile, Bitcoin dropped below $63,000 and lost 1% in the last 24 hours. The gold price has fallen by 1.3% to around $4,100 per ounce and silver is trading above $65 an ounce having fallen 1%.