Iran has withdrawn from peace negotiations with the United States, threatening military action against Israel amid a sharp escalation across the Middle East.
A state-affiliated news agency reported that Tehran vowed to strike northern Israel if Lebanon is hit by Israeli attacks, and to end “talks and exchange of texts through intermediaries” with the US until Israel halts offensives in both Gaza and Beirut.
Benjamin Netanyahu announced on Monday Israel’s plans to hit Beirut’s southern suburbs with a round of missile strikes, dramatically intensifying regional tensions.
The Israeli Prime Minister ordered the offensive after the country’s military seized a strategically important fortress in southern Lebanon, marking its deepest incursion into its neighbour in more than half a century.
Iran said both the incursion and Netanyahu’s decision to order a strike constituted a transgression of the fragile ceasefire that has held across the region over the past two months.
Iran’s military warned residents in northern Israel to evacuate in the event that Netanyahu follows through with the planned attack on Beirut’s southern suburbs.
Tehran also said it was highly unlikely a peace deal could be struck without a rapid de-escalation from Tel Aviv, further dimming prospects for a diplomatic resolution.
The announcements triggered an immediate market reaction, with Brent Crude surging back to $97 a barrel after falling more than 11 per cent last week on hopes negotiators were nearing an agreement.
The FTSE 100 fell by more than half a percentage point on the news, closing the trading session down 0.68 per cent as investors responded to the heightened geopolitical risk.
Donald Trump said Tehran had not formally told the US it was suspending peace talks, but added that “going silent would be very good” because his team and the Iranian regime had “been talking too much.”
“It’s an appropriate thing to say, because they’re better negotiators than they are fighters,” the US President told NBC News.
“It doesn’t mean we’re going to go and start dropping bombs all over there,” he added. “We’ll keep the blockade.”
Tensions over Israel’s latest offensive marked the second threat to the delicate ceasefire in just two days, after the US and Iran traded strikes over the weekend.
On Monday, US Central Command said it had launched “self-defence strikes” on several Iranian military sites, after Iran shot down one of its drones.
The flurry of strikes and counter-strikes upends a period of thawing tensions, with reports last week suggesting Washington and Tehran were nearing a deal that would mandate the full opening of the Strait of Hormuz shipping lane.
In a social media post on Monday, Trump said the peace deal would “work out well” and urged people to “sit back and relax.”