Despite 'economic D-day', Iran-US talks are moving ahead

Gaza parents have been warned to stop their children flying kites in the war-ravaged enclave, after Israel threatened a forceful response against what it says are "security threats"

The popular committees, comprising representatives of local non-government organizations and charities that run Gaza displacement camps and shelters, issued the warning in a statement late on Monday.

The announcement was coordinated with Hamas authorities, a source in the militant group said.

"We are working tirelessly on the ground and doing everything possible to stop this practice, not to restrict the childhood of our children, who have already been deprived of the most basic rights to play and live in safety, but to protect their innocent lives," the statement said.

Umm Mohammed, a mother from Gaza City who spoke with Reuters over a chat app, said she was worried her son could be hurt.

"Every summer, my kid, Ahmed, 10, and the kids in the street fly those kites to entertain themselves, but I will not allow him to, not anymore," she said.

Long queues formed at petrol stations in Tehran on Tuesday after the United States announced fresh sanctions aimed at pressuring Iran into submission.

Washington has turned to pulling economic levers six months into a war on Iran that has ground to a stalemate militarily, with peace talks stalled and most traffic through the crucial Strait of Hormuz blocked.

US Treasury Secretary Scott Bessent on Monday laid out plans for the "economic asphyxiation" of Iran, saying the "objective is to sever every economic lifeline that sustains this tyrannical regime".

Though Iran's leaders have shrugged off the tough talk, having already endured sanctions for decades, some residents of the capital feared that they would feel the pinch.

"Naturally, sanctions affect people's lives. People are being hurt, both those who are financially well-off and those who are financially weak," said realtor Mehdi Yazdian, 55, who urged the authorities to control prices. Yes, these sanctions are having an effect, but naturally, our people are resilient. These sanctions have been in place for 47 years."

The US dollar held steady on Tuesday, but remained at risk of further declines as investors parsed Washington's expanded sanctions against Iran and renewed efforts to ease pressure on longer-dated Treasury yields.

The currency had come under pressure late last week after US Treasury Secretary Scott Bessent unnerved investors by saying the Treasury would double the size of quarterly repurchases of longer-dated bonds, sparking concerns about a shift to a more interventionist strategy to curb the rise in borrowing costs ahead of mid-term elections later this year.

Investors also avoided large bets as the expansion of sanctions against Iran unveiled on Monday did not have any mention of major trade partners such as China, although Bessent warned countries to cut business ties with Tehran or risk being forced out of the dollar-based financial system. 

US President Donald Trump expressed outrage on Tuesday at the growing number of executions in Iran of people allegedly involved in mass protests earlier this year before the US-Israeli war began.

"The failing Islamic Republic of Iran is not paying large segments of their military, while at the same time killing protesters, even when they are not protesting, at levels not seen before," he wrote on Truth Social.

"It is a humanitarian crisis of epic proportions, and must be stopped, NOW," he added.

It was not immediately clear what new information had spurred the early morning post, but there has been a steady increase in executions since the outbreak of the war on 28 February.

One-third of the vessels Iran threatened to confiscate for breaching Strait of Hormuz transit rules have already been attacked during the US-Israeli war on Iran, an AFP data analysis found.

Since the war erupted in late February, Tehran has sought to impose its own shipping corridor in a bid to control traffic through the strategic chokepoint, which had been open before the war and governed by international maritime law.

But not all vessels have been passing through this Iranian-approved route in the northern part of the waterway.

On Sunday, the Persian Gulf Strait Authority (PGSA), created by Iran in May to oversee the strait, published a list of 45 vessels on its X account that face future "restrictions" during their next passage, including "fines, seizures or confiscations".

The maritime authority said the measures were in response to previous "violations" of Iranian rules.

Of the 45 vessels on the list, at least 14 have already been damaged in incidents in or around the strait that were confirmed by the International Maritime Organisation.

All of these incidents were classified as attacks by Britain's maritime security agency UKMTO, which does not specify who was responsible.

Almost all took place off Oman's coast, along a route backed by the United States and banned by Iran.

Israeli police raided a vocational training centre run by the UN agency for Palestinian refugees (UNRWA) in an occupied east Jerusalem suburb on Tuesday, in a move a far-right fundamentalist minister said aimed to "remove" the body from the site.

The attack follows repeated warnings by UNRWA that Israeli authorities were threatening its Qalandia training centre, located between the east Jerusalem neighbourhood of Kafr Aqab and Qalandia refugee camp.

The centre was established in 1952 and offers vocational training to around 340 Palestinians from the occupied West Bank every year, according to UNRWA.

"Making history! This morning we are starting work to remove UNRWA from Kafr Aqab," national security minister Itamar Ben Gvir posted on his Telegram.

The Jerusalem Governorate, the Palestinian local authority for the region encompassing Qalandia camp, said Israeli forces had raised the Israeli flag in the courtyard of the training centre.

Mohammad Saeed Aslan, from the Popular Committee for Services in Qalandia camp, pointed out Israel seeks "to take control of UNRWA's institutions in general".

The raid on the Qalandia training centre comes a day after representatives from more than 25 diplomatic missions and international organisations visited the site.

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The US Navy aircraft carrier the USS Abraham Lincoln will dock in Thailand next week, a Thai official said on Tuesday, following a prolonged deployment for the Iran war and reports of mental health concerns and deteriorating conditions aboard.

The Lincoln, which left the Middle East on Saturday, has not made a port call in more ⁠than ​200 days, setting a modern-day record for consecutive ​days at sea, according to Democratic lawmakers. Typically naval deployments are for between six and nine months, but during times of conflict, that can be extended.

The ship, which has roughly ​5,000 sailors and Marines aboard, will be in Thailand for "rest and recreation after their long sea journey," the official said, asking not to be named.

The Lincoln left its home port of San Diego in November and was ​later redirected ​to the Middle ⁠East to support US military operations in the war with Iran.

Two military-focused outlets, Navy Times and Stars and ‌Stripes, this month reported suicide attempts and declining morale on the ship. 

The United Nations on Tuesday slammed Israel's threat to expel people, notably children, from areas where kites, drones and balloons are launched from in Gaza, lamenting "unacceptable rhetoric" coming from Israeli leaders.

"On the threat of expulsion due to children's kite flying, I hope we can all agree that this is outrageous," UN rights office spokeswoman Ravina Shamdasani told reporters in Geneva.

Israel warned Hamas on Sunday that it would increase its attacks in Gaza if launches of kites, drones and balloons towards Israel continued, after Israeli media reported that four kites were found in communities near the Gaza border on Saturday and one was shot down by the army on Sunday, bringing the total number recovered in recent days to around 10.

The UN spokeswoman highlighted that Israel's recent statement was only the latest in a string of threats.

"We continue to see unacceptable rhetoric coming from the highest level of the Israeli authorities, showing utter contempt for international human rights and humanitarian law, and advocating and inciting violence amounting to atrocity crimes," she said.

US sanctions on Iran are unilateral and Qatar is supportive of mediation efforts to resolve the issue between the two countries, a Qatari foreign ministry spokesperson said on Tuesday.

The US State Department is preparing to return diplomats to embassies in the Middle East that were evacuated before and during the war with Iran, the New York Times reported on Tuesday, citing an internal State Department document.

The return of Foreign Service officers and the scaling back of emergency measures at US missions in the region could begin as early as this week, the report said.

Embassies slated to restore higher staffing levels include those in Israel, Lebanon, Saudi Arabia, Qatar, Jordan, Oman, Iraq and Kuwait, according to the report.

An oil tanker has been struck by an unidentified projectile and disabled about 9 nautical miles northeast of Oman’s Ash Shishah, the United Kingdom Maritime Trade Operations says.

The strike damaged the vessel’s engine room, while its crew are reported safe, UKMTO says in an advisory note, adding the environmental impact isn't immediately known.

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Asian shares were mostly lower Tuesday after US stocks drifted to a mixed finish ahead of potentially market-moving events later in the week.

Regional benchmarks traded in a narrow range and US futures were nearly unchanged.

Oil prices were little changed after US Treasury Secretary Scott Bessent announced fresh sanctions against Iran and warned that countries persisting in doing business with the Islamic Republic would face retaliation.

Tokyo's Nikkei 225 gained 0.4% to 65,811.19 and the Kospi in South Korea fell 0.4% to 6,675.88.

Hong Kong's Hang Seng lost 0.3% to 25,453.19, while the Shanghai Composite index edged 0.1% lower, to 3,878.38.

In Australia, the S&P/ASX 200 gained 0.6% to 9,158.70.

Taiwan's Taiex edged less than 0.1% lower, while the Sensex in India lost 0.3%.

Turkey on Tuesday welcomed the United States' decision to remove Syria from its list of state sponsors of terrorism, hoping that it would boost efforts to integrate the war-torn country with the world.

"We believe this decision will lend momentum to efforts to strengthen Syria's ties with the international community and to establish lasting security and stability in the country," the foreign ministry said in a statement.

Syrian President Ahmed al-Sharaa hailed early on Tuesday the United States' removal of his country from the state sponsors of terror list, a major sanctions relief step.

"Today, Syria shakes off a dark stain and tears away a painful chapter of its past to embark on a path of development, reconstruction and rebuilding," Sharaa said in a speech.

Washington's decision on Monday rescinded a decades-old designation that came with severe economic restrictions, marking another step in warming ties between the countries following the 2024 ouster of longtime Syrian ruler Bashar al-Assad.

The Treasury Department announced corresponding sanctions relief.

Sharaa expressed his "many thanks to the President of the United States of America, Donald Trump, and to all the friendly and supportive nations that stood by us".

China said on Tuesday it would safeguard its interests after Washington laid out plans for the "economic asphyxiation" of Beijing's economic partner Iran, issuing penalties on some entities including in China and expanding secondary sanctions threats.

"China has already stated many times that it firmly opposes illegal unilateral sanctions... China will take all necessary measures to firmly safeguard its own rights and interests," foreign ministry spokesman Lin Jian told a regular news briefing.

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Just two commodity vessels transited the key energy chokepoint of the Strait of Hormuz on Monday, for the lowest daily tally since early May, with both entering the Gulf, shipping data showed.

The figure was also well below the 10-day average of 14, with just one very large gas carrier and one very large crude carrier entering the strait from the Gulf of Oman, according to shiptracker Kpler early on Tuesday.

German growth rose faster than previously thought in the second quarter thanks to strong exports, official data showed Tuesday, as Europe's biggest economy defied the turmoil unleashed by the Iran war.

Gross domestic product grew 0.3 percent from April to June compared with the first three months of the year, according to revised data from the statistics office Destatis. A first estimate in July had put growth at 0.2 percent.

 Iran promised to retaliate against expanded U.S. sanctions that the Americans said would cut Iran's economic lifeline, with Tehran expressing confidence that major trading partners would resist Washington's pressure campaign.

US Treasury Secretary Scott Bessent unveiled the measures on Monday but stopped short of the most punishing sanctions, saying countries that continued trading with Iran risked being forced out of the dollar-based financial system.

After the sanctions were unveiled, Iranian Economy Minister Ali Madanizadeh said, "We are fully prepared for the US sanctions."

He told state television, "Naturally, the enemies intend to launch an economic terrorist attack on us, but we also have our own tools and know how to play the game. Our defense is no longer so defensive; the enemies should wait for an attack."

Neither China nor Russia had "accepted" the US measures, he added, predicting that other countries would resist them.

Pakistan and Iran made "significant progress" in talks that focused on the US-Israeli war on Iran and a path to peace, Pakistan's interior minister said on Tuesday, at the end of a visit to Tehran.

Talks between the two sides focused on measures to prevent further escalation, reopening of the Strait of Hormuz and an expedited termination of the conflict, a statement from the Pakistani military said about the meeting between the country's army chief, Asim Munir, and the Iranian leadership.

The two sides also exchanged views on regional peace and the way to arrive at a negotiated settlement to the dispute, the statement said.

"The Iranian President candidly shared his government's perspective and we had a very constructive exchange on the issues involved," Interior Minister Mohsin Naqvi, who accompanied Munir to Tehran, said in a post on X.