Iran warns Israel seeks endless war as deal faces first test

Iran's Foreign Minister Abbas Araghchi accused Israel of being "a threat to all humanity" with "no interest except endless war," escalating rhetoric that risks unraveling the U.S.-Iran memorandum of understanding signed Wednesday.

"This is not the ranting of some random genocide fanatic — it is a public post by Israel's National Security Minister," Araghchi said on social media platform X, responding to a post by Itamar Ben-Gvir, the far-right minister who has called for the resumption of full-scale military operations against Iran and its proxies.

The accusation came as Israeli forces struck at least 80 Hezbollah targets across southern Lebanon overnight, killing 18 people in the deadliest attacks since the U.S.-Iran agreement was signed, according to Lebanon's state-run National News Agency. Four Israeli soldiers died in the fighting, including a lieutenant colonel, while five others were wounded by an explosive drone, the Israel Defense Forces said.

The exchange threatens to derail the 14-point interim agreement that calls for an immediate cessation of hostilities on all fronts, including Lebanon, and 60 days of direct bilateral negotiations aimed at a broader peace deal. Planned talks in Switzerland, where Vice President JD Vance was set to lead the U.S. delegation, were postponed Friday as fighting intensified. The White House cited logistical issues, while regional officials told the Associated Press that Iran suspended participation specifically over the renewed fighting in Lebanon and comments by Prime Minister Benjamin Netanyahu.

Oil Markets Test the Fragile Truce

Brent crude rose 1.2 percent to $73.40 a barrel in early Asian trading Friday as traders priced in the risk that the renewed Israel-Hezbollah clashes could disrupt the broader U.S.-Iran détente. The Strait of Hormuz — through which about 20 million barrels of oil pass daily, roughly one-fifth of global consumption — had seen a sharp recovery in traffic Thursday, with 25 commercial vessels transiting the waterway, the highest single-day count since mid-April, according to maritime data firm AXSMarine. Any renewed threat to the strait would immediately reverse that normalization.

The last time Iran and Israel traded accusations at this level was in April, when Iran launched more than 300 drones and missiles at Israel in retaliation for a strike on its Damascus consulate. That exchange pushed Brent above $92 a barrel and sent gold to a then-record $2,431 an ounce. Gold traded at $2,388 Friday, up 0.3 percent, as investors rotated into safe-haven assets.

Iran's Dual Track: Deal Signed, Trust Denied

Iran's Supreme National Security Council said Friday that the regime signed the memorandum but has "complete distrust" in the United States to uphold the agreement, warning that "any deviation or violation" would bring reciprocal action. The statement underscores the fundamental asymmetry in how both sides frame the deal: President Trump presents it as a victory of American pressure, while Tehran describes it as evidence of Washington's desperation.

Iran's chief negotiator Mohammad Bagher Ghalibaf said direct talks with the U.S. would be bound by Tehran's "red lines," adding that "if the enemy seeks to be excessive, we have proven that our fingers are on the trigger." The 60-day negotiation window, which was supposed to begin Friday in Switzerland, now has no confirmed start date.

France's foreign minister Jean-Noël Barrot called on the U.S. to pressure Israel to halt operations in Lebanon, saying the agreement "involves the cessation of hostilities" and that Washington "must exert all the necessary pressure." Hezbollah, designated a terrorist organization by the U.S. and Israel, said it would continue attacking Israeli troops, accusing Israel of never complying with any ceasefire since November 2024.

The core risk for markets is that the 60-day diplomatic countdown becomes a countdown to renewed conflict rather than a pathway to peace. If the talks collapse, the Strait of Hormuz could again become a flashpoint, oil prices could spike, and the defense sector — already elevated on elevated Middle East risk premiums — would see further gains. Israel's benchmark TA-35 index fell 0.8 percent Friday, while Israel's shekel weakened 0.4 percent against the dollar.

This article is for informational purposes only and does not constitute investment advice.