Iran activated its air defense system in the western city of Kermanshah on Monday after detecting an enemy target, as the first direct military exchange between Iran and Israel since the April cease-fire entered a second day.
Iran's Islamic Revolutionary Guards Corps launched ballistic missiles at northern Israel late Sunday, the first such attack since the truce paused the U.S.-Israeli war with Iran in February. The IRGC said the strike targeted Israel's Ramat David Airbase and was a response to Israeli attacks on Hezbollah in Lebanon, warning that "if aggressions are repeated, the responses will be broader."
Hours later, the Israeli military said it had struck military targets in western and central Iran. Iranian state media reported explosions in Tehran, the capital, and the cities of Tabriz and Isfahan. The Israeli air force also hit a petrochemical complex in Mahshahr, southern Iran — the second time it has targeted the facility since April.
"The situation has escalated far beyond what the cease-fire framework was designed to contain," said Elena Fischer, a geopolitical risk analyst based in London. "Each side is testing the other's red lines, and the market is pricing in a non-trivial probability that the Strait of Hormuz disruption becomes permanent."
Brent crude rose 2.9% to $95.79 a barrel in early Asian trading, extending gains from last week when the U.S. military struck Iranian coastal radar sites in the Strait of Hormuz. The waterway, which handles about 21% of the world's oil trade, has been effectively closed since late February when Iran retaliated against the initial U.S.-Israeli attack by blocking shipping traffic. The last time the strait was disrupted for an extended period — during the Iran-Iraq war in the 1980s — oil prices doubled over six months.
Escalation tests Trump's mediation push
President Donald Trump told Fox News on Sunday that Israel's strike on Beirut had not been coordinated with the United States and that he was "not happy about it." In an interview with the Financial Times, Trump said Prime Minister Benjamin Netanyahu would have "no choice" but to accept a deal with Iran, adding: "I call all the shots. He doesn't call the shots."
The president told Axios he planned to call Netanyahu to urge him not to retaliate against Iran's missile barrage, saying "Israel had its strike and Iran had its strike. We don't need another one." But by early Monday, Israeli warplanes had already struck targets inside Iran, and the military said it detected more missiles launched from Iran toward Israel.
The U.S. Embassy in Jerusalem ordered all government employees and their families in Israel to shelter in place. Crossings in and out of Gaza at Rafah and Kerem Shalom were closed, cutting off the only entry point for goods into the enclave of about 2 million Palestinians.
Cease-fire unravels on multiple fronts
The violence threatens to unravel the April 8 cease-fire that ended the U.S.-Israeli air campaign against Iran. Although the Israeli and Lebanese governments agreed last week to renew a truce, Hezbollah rejected the agreement, and fighting intensified in recent days. Iran has said any lasting settlement must extend to Lebanon.
Britain and Canada urged both sides to de-escalate. Yvette Cooper, the British foreign secretary, said negotiations must continue toward a lasting settlement that would restore global trade. Canada's foreign ministry said the resumption of fighting "jeopardizes ongoing negotiations and the prospects for peace."
Israel closed schools nationwide on Monday as a precautionary measure. The Israeli military said its air defense systems intercepted the initial Iranian missile barrage, with no immediate reports of casualties from the strikes. Magen David Adom, the rescue service, said it treated several people injured while heading to shelters.
The Kermanshah air defense activation on Monday morning suggests Iran remains on high alert for further Israeli strikes. The city lies about 120 kilometers from the Iraqi border, near key military installations and oil infrastructure in western Iran.
This article is for informational purposes only and does not constitute investment advice.