Key Takeaways:
Israeli Defense Minister Israel Katz confirmed US fighter jets and tanker aircraft have been operating from Israeli military bases to conduct strikes against Iran, a disclosure that threatens to unravel the fragile three-day pause in hostilities.
The disclosure that US warplanes are staging strikes on Iran from Israeli soil adds a new dimension to a conflict that has already pushed Brent crude past $118 a barrel at its peak before settling at $88.36 Monday, as a three-day pause in direct US-Iran fire hangs in the balance.
"American aircraft involved in strikes on Iran have been taking off and refuelling from Israel," Katz told Channel 14 on Monday. He claimed Iran has avoided attacking Israel directly because it knows US military operations are being launched from Israeli territory, creating deterrence.
The confirmation came as oil benchmarks extended their decline on the ceasefire hopes, with Brent crude falling 8.7% to $88.36 a barrel and West Texas Intermediate dropping 7.5% to $82.61 — their lowest settlements in more than a week. The pullback erased a portion of the roughly 30% cumulative gain since hostilities escalated on Feb. 28, when US and Israeli strikes on Iranian targets triggered a cycle of retaliation that disrupted the Strait of Hormuz, a waterway handling about 21% of global oil supply.
The question now is whether Katz's disclosure complicates the diplomatic track. Trump said Monday the US was holding "good talks" with Iran and expressed hope diplomacy could end the conflict, while warning military strikes would resume if negotiations collapsed. Mediators led by Qatar and Pakistan have made "significant" progress toward returning to an interim ceasefire deal, according to regional officials cited by the Associated Press.
The timing of Katz's remarks is particularly sensitive. Israeli Prime Minister Benjamin Netanyahu arrived in Washington on Monday for a White House meeting with Trump scheduled for Tuesday — their first face-to-face since launching the war on Iran that killed Supreme Leader Ayatollah Ali Khamenei. The meeting comes after Vice President JD Vance publicly criticized Israel, and with Trump having repeatedly voiced frustration with Netanyahu's approach.
Iran's response to the Israeli defense minister's disclosure was swift. Foreign Ministry spokesman Esmail Baghaei dismissed reports of direct US-Iran talks as "fabricated," though he confirmed indirect messages were still being exchanged through mediators. Tehran also warned that any US attempt to impose an "illegal" maritime blockade would be viewed as an escalation, with the Quds Force headquarters vowing to respond to any such action.
The economic toll mounts
The conflict has inflicted severe damage on Iran's energy infrastructure. Government spokesperson Fatemeh Mohajerani said Tuesday that Iran lost around 230 million cubic meters of gas production capacity as a result of the war. An initial assessment put Iran's direct and indirect losses since Feb. 28 at roughly $270 billion.
For global markets, the key variable remains the Strait of Hormuz. Commercial shipping traffic through the waterway hit a three-week low over the weekend, a US Navy maritime body reported, with no new attacks confirmed in the previous 72 hours. Iran and Oman have held talks on managing ship traffic through the strait, with Tehran asserting that an interim deal allows it to manage shipping and potentially charge fees — a claim the US rejects.
The last time a similar disruption threatened the strait was during the Iran-Iraq war in the 1980s, when the Tanker War pushed oil prices to then-record levels and prompted US naval intervention. The current episode has already drawn down US munitions stockpiles, with Gen. Dan Caine, chairman of the Joint Chiefs of Staff, telling lawmakers last week that "airpower has its limits" in achieving military objectives.
Scattered attacks continued despite the pause. Saudi Arabia reported shooting down drones fired by Iran-backed militias in Iraq targeting its petroleum facilities. Yemen's Houthis claimed strikes on Saudi oil infrastructure, while explosions were reported near the US Consulate in Erbil, northern Iraq, with more than 10 US warplanes and drones responding.
The 60-day period established by the interim ceasefire deal in mid-June is now well into its second half, with major issues — notably Iran's nuclear program — set aside as mediators try to keep both sides talking. Trump's warning that the US could "go back to doing what we were doing two days ago" if talks fail leaves the market pricing a binary outcome: diplomacy or a return to strikes that could push oil back above $100.
This article is for informational purposes only and does not constitute investment advice.
