Iran vows to strike the Gulf's energy infrastructure; Houthis attack Saudi

Wall Street retreated early Tuesday as oil prices pushed higher while markets awaited key inflation data later in the week.

Brent oil futures were trading above $97 a barrel following Houthi attacks targeting Saudi oil infrastructure, part of an effort to gain control of Bab al-Mandeb Strait, a conduit for Saudi crude after Iran blockaded the Strait of Hormuz.

About 10 minutes into trading, the Dow Jones Industrial Average was down 0.2 percent at 52,962.18.

The broad-based S&P 500 dipped 0.2 percent to 7,701.95, while the tech-rich Nasdaq Composite Index also lost 0.2 percent at 26,464.68.

Markets are looking ahead to consumer and wholesale inflation reports later in the week, considered key inputs for a Federal Reserve September 16 decision on interest rates.

"Our forecast is that we're going to see a fairly big inflation increase this month, so we are expecting the Fed will raise rates," said FHN Financial's Chris Low.

Among individual companies, GE Aerospace rose 0.7 percent after announcing it would buy Consolidated Precision Productions for $11.75 billion from private investment firms Warburg Pincus and Berkshire Partners.

CPP is a manufacturer of castings, which are used to make aviation parts.

The Palestinian Health Ministry reports that four Palestinians were killed by Israeli gunfire and attacks in Qalqilya, Nablus, and Tulkarem, in the occupied West Bank over the past 24 hours.

The total number of Palestinians killed by Israelis in the occupied West Bank is now at 100 since the beginning of 2026.

Twelve countries including Britain, Canada and France Tuesday said they would slap sanctions on trade with Israeli settlements in the occupied West Bank, after increasing attacks by Israeli settlers against Palestinian villages.

"Today, Canada, Denmark, Finland, France, Iceland, Ireland, Norway, Poland, Portugal, Spain, Sweden and the UK confirm their intention to introduce national and/or support European restrictions on trade in goods with settlements which are illegal under international law, or that they are actively considering these and other measures, in accordance with their national procedures," the nations' foreign ministers said in a joint statement.

Britain will introduce an import ban on goods from illegal Israeli settlements in the occupied West Bank, foreign minister Ed Miliband said on Tuesday, adding that there will also be a comprehensive sanctions regime put in place.

The import ban and associated sanctions, which Britain has framed as a sign of fresh support for the two-state solution, follows criticism of Israel's E1 settlement project in the occupied West Bank.

Britain's foreign minister Ed Miliband said on Tuesday that Britain is sanctioning Hezbollah-run financial institution Al-Qard Al-Hassan, as he announced a trade ban on goods made in Israeli settlements in the occupied West Bank.

Lebanon's central bank last year banned banks and brokerages from dealing with Al-Qard Al-Hassan, which describes itself as a charitable organisation that provides loans to people according to Islamic principles that forbid interest.

Houthi media in Yemen reported a series of Saudi strikes on Tuesday after a wave of attacks by the rebels injured dozens in southern Saudi Arabia.

"The Saudi aggression launches a series of raids on Al-Waziyah district" in Taiz province, where fighting has raged for days, Almasirah television said, after also reporting four Saudi strikes in Marib province.

Iran's Foreign Minister Abbas Araghchi said Tuesday there had been "significant progress" in talks with Oman over the administration of the strategic Strait of Hormuz.

According to an Iranian foreign ministry statement, Araghchi "explained the latest status of Iran-Oman talks on the Strait of Hormuz, reporting significant progress" during a call with his Japanese counterpart.

Iran and Oman, both coastal states on the strait, have for weeks been discussing the future of navigation through the waterway, with Tehran saying progress had been made to agree a temporary shipping route.

Iranian forces have restricted traffic through Hormuz, a vital energy conduit, since the US-Israeli war on Iran began on 28 February.

The US has imposed a counter naval blockade on Iranian ports.

President Donald Trump said in recent days that American forces have helped facilitate the passage of vessels through the strait, "averaging 30 ships a night".

Iran's security chief Mohsen Rezaei said Sunday that the US tries each night to help five or six ships through, "and usually these ships get hit".

Tehran has required vessels to seek permission to transit, insisting there will be no return to the pre-war system of unrestricted navigation.

It has also sought to impose service fees on ships using the strait—a move strongly opposed by Washington and regional countries.

Iranian officials recently said a deal between Oman and Iran could be signed "in the coming days".

They have however insisted the strait will not reopen until the United States meets Iranian demands, including removing oil sanctions, unfreezing Iranian assets abroad and lifting the naval blockade on Iranian ports.

An Israeli court on Tuesday rejected a bid from rights groups to halt development of a settlement in the occupied West Bank that would break the territorial contiguity of a future Palestinian state.

The Jerusalem District Court said in a ruling it had dismissed the motion, which aimed to stall the publication of tenders for the settlement east of Jerusalem.

Last month, Israel's construction and housing ministry opened a tender for construction of more than 1,200 housing units, leading NGOs to file motions against it.

Lebanese President Joseph Aoun condemned what he described as "terrorist attacks that targeted several Saudi cities today, (...) which affected civilian and economic figures, and led to the injury of a number of civilians, including women and children."

"We in Lebanon are following with great concern this dangerous escalation that targets the security and stability of the sister Kingdom of Saudi Arabia, and we strongly condemn this aggressive act, which constitutes a clear violation of the sovereignty of a sister country and a direct threat to the safety of its citizens and those residing on its lands," he said.

"Lebanon's full solidarity, as president and people, with the leadership and people of the Kingdom of Saudi Arabia in the face of this sinful attack," Aoun affirmed, further stressing that "the Kingdom's security is an integral part of the security of Lebanon and the entire Arab region, and that any targeting of its sovereignty requires unified Arab and international condemnation."

CNN, citing six sources, reported that quiet discussions recently took place within the US military and intelligence circles regarding reducing the number of personnel and facilities usually deployed in the Middle East, if the administration of President Donald Trump succeeds in ending the conflict with Iran.

According to the network, the implementation of these reductions will represent a new shift in how the US national security agencies deal with the region, after the United States expanded, in the wake of the attacks of 11 September 2001, its network of permanent military and intelligence facilities to carry out operations and wars in a number of countries in the region.

CNN indicated that the recent confrontation with Iran revealed major weaknesses in the US infrastructure in the region, after several facilities became targets of repeated Iranian attacks, in a war that resulted in the death of 18 US soldiers.

Britain on Tuesday published legislation to introduce tougher sanctions on Iran, expanding trade restrictions and powers to target ships as part of what it described as wider effort to curb Tehran's nuclear programme and other hostile activities.

The government said the measures would restrict Iran's access to the British financial system, expand trade bans to additional goods, technology and services, and prohibit Iranian aircraft from landing in Britain unless exemptions apply.

Iran's inflation crisis is squeezing families as sanctions, the US war, and a currency collapse drive up food, healthcare, fuel, and living costs, writes Ariya Farahmand.

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Nicaragua Tuesday accused Germany of "multiple violations of international law" at the United Nations top court, as it pressed its case that Berlin is complicit in the Israeli genocide of Gaza.

The central American country has dragged Germany to the International Court of Justice in The Hague, accusing Berlin of breaching the 1948 UN Genocide Convention with its support, notably arms shipments, for Israel.

"Nicaragua invokes Germany's responsibility in connection to multiple violations of international law, particularly in respect of the odious scourge of genocide and international humanitarian law," ambassador Carlos Jose Arguello Gomez told the court.

Gomez said Nicaragua's claims "involve the most serious breaches of obligations arising under... general international law."

Germany is now seeking to have it thrown out completely, arguing that judges do not have jurisdiction and that Nicaragua's case does not hold water.

On Monday, the first of four days of hearings, Germany's representative Julia Monar argued Germany's "unwavering support for the existence and security of the State of Israel" but also said it was one of the world's largest bilateral donors to the Palestinian Territories.

"All German exports of military technology and equipment to Israel -- as to any country -- are subject to strict licensing requirements which exceed international requirements," she said.

It takes on average six months for the court to hand down a ruling in such cases.

The court could either side with Germany and throw out the case completely or rule against Berlin, meaning the case would then be considered "on the merits" in more detail.

Qatari Prime Minister Sheikh Mohammed bin Abdulrahman bin Jassim Al Thani and China’s Minister of Foreign Affairs Wang Yi have discussed regional developments, including the freedom of navigation in the Strait of Hormuz, in a meeting in Beijing, according to the foreign ministry’s statement on X.

Sheikh Mohammed affirmed Qatar’s support for all diplomatic efforts aimed at ensuring maritime navigation and "paving the way for a comprehensive agreement".

A surge in the yen and mixed economic data sent Asian stocks lower on Tuesday, while fresh Iranian threats in the Gulf drove commodity prices and Treasury bond yields higher.

The yen jumped as much as 1% to 152.89, its strongest level since 18 February, as investors unwound an estimated $2.35 trillion in yen-funded carry trades.

"The yen has rallied to its strongest level since February, driven by a sharp unwinding of short-yen and carry-trade positions as investors price in faster Bank of Japan tightening," said Joel Kruger, market strategist at LMAX Group in London.

"Speculation over capital repatriation by Japanese investors and the authorities' demonstrated willingness to support the currency through intervention have added momentum to the move."

Japan's Nikkei 225 share index fluctuated between gains and losses before lurching down 1.7%, as S&P 500 e-mini futures slid 0.3% after a holiday in the US on Monday.

MSCI's broadest index of Asia-Pacific shares outside Japan was 0.5% lower, with regional declines led by a 1% fall in Australian shares after a measure of local consumer sentiment fell sharply in September.

Oil prices rose for a third day in Asia, with Brent crude futures climbing 1.4% to $98.34 a barrel, after Iran threatened to retaliate on Tuesday against the US with "economic warfare" and said it had fired an advanced missile at US warships.

"While US Labor Day made for a somewhat quieter start to the week for trading volumes, the weekend’s tit-for-tat strikes between the US and Iran continued to put upward pressure on oil prices, acting as a drag on risk sentiment more broadly," Westpac analysts said.

Oil prices are rising amid tensions in the region with Brent crude trading today at around $98, an increase of nearly 2%, and West Texas Intermediate (WTI) crude is trading at around $94.

Israeli opposition leaders on Tuesday called Prime Minister Benjamin Netanyahu unfit to serve after a report that the United Arab Emirates had warned him before the 7 October 2023 Hamas-led attack.

Haaretz newspaper, in a report excerpted from a forthcoming book by its reporters, said UAE President Mohamed bin Zayed Al Nahyan spoke to Netanyahu a week and a half before the attack and told him that Hamas was planning a major operation.

Netanyahu's office called the report by the Israeli newspaper "an absolute lie" and denied he spoke to the Emirati leader at that time.

Gadi Eisenkot, a former military commander who has emerged as Netanyahu's top rival in upcoming 27 October elections, accused the long-serving prime minister of evading responsibility for security lapses and resorting to "pathetic" excuses, such as saying he was not woken up soon enough on the morning of the attack.

"Netanyahu received dozens of warnings for October 7 and ignored them all. He is unfit," Eisenkot wrote on X.

Naftali Bennett, a former prime minister also running in elections, said Netanyahu "bears personal and direct responsibility" for the deaths on October 7, the deadliest attack in Israeli history.

"Netanyahu cannot continue to serve in his position for even one more minute," Bennett said.

Haaretz said that Hamas leader Yahya Sinwar, later killed by Israel, had warned a former Palestinian official that the militants were preparing "a terrifying operation" which he described as an "earthquake".

The former Palestinian official relayed the message to an Emirati advisor, who passed it on to the Emirati leader who then called Netanyahu, according to the newspaper.

The UAE 'normalised' ties with Israel in 2020 as part of the US-brokered Abraham Accords under President Donald Trump's first administration.

Netanyahu sees close ties with the UAE as a key achievement.

American will react to the UK's expected announcement of a ban on trade with Israeli settlements in the occupied West Bank, US Ambassador to Israel Mike Huckabee says.

Huckabee told BBC News, "I think without a doubt there will be" a reaction, including at the level of individual states.

This could have a "huge economic impact on British businesses," he says, explaining some could be banned from doing business in certain states.

Britain will announce a trade ban on goods made in Israeli settlements in the occupied West Bank later on Tuesday, confirmed a senior minister, as part of the UK's efforts to support a two-state solution.

Six weeks into his new job, foreign minister Ed Miliband flagged last week that he was looking at resetting Britain's policy on Israel, and he is due to make a statement on Israel and trading restrictions in the House of Commons.

Britain's new Prime Minister Andy Burnham, also in office since July, spoke to US President Donald Trump on Monday to stress the "the importance of the two-state solution", in what is seen as a reference to the sanctions.

Miliband said last week that Israel's E1 settlement project in the occupied West Bank would cut across land which the Palestinians seek for a state, putting at risk the two-state solution.

Asked about how the trade ban would operate, pensions minister Pat McFadden did not give details.

"The foreign secretary will make a statement to Parliament later today," McFadden told Times Radio. "The reason that danger has become more urgent is because of expanded settlement activity in recent weeks and months."

UN bodies and most governments, including Britain, consider Israeli settlements in the occupied West Bank illegal under international law.

Saudi Arabia on Tuesday condemned Houthi attacks on its territory that wounded 73 people, saying it will "take all necessary measures to defend its sovereignty".

The foreign ministry, in a statement carried by the official Saudi Press Agency, called for an "immediate halt to all forms of escalation practised by this militia" as well as Houthi attacks on shipping.

Shipping traffic through the Strait of Hormuz slowed at the start of this week, after Iran threatened on Monday to retaliate for any new US attacks.

The number of commodity vessels sailing through the Strait of Hormuz totalled seven on Monday, compared with eight on the previous day, Kpler data showed on Tuesday.

Iran had warned that energy infrastructure across the Gulf, including US oil and gas interests, was vulnerable.

Goldman Sachs also raised its Brent and West Texas Intermediate crude oil price forecasts for December 2026 and 2027, as it expects shipping disruptions in the Middle East to persist into next year.

Traffic increased through the Bab al-Mandeb strait, however, another major waterway for commodity vessels.

A total of 29 commodity vessels passed through Bab al-Mandeb on Monday, up from 17 on the previous day, Kpler data showed.

Some vessels may be sailing through the two straits with their transponders off, which is not considered in the counts.

Iran-backed Houthi militia attacked several cities in Saudi Arabia, wounding 73 people, a spokesperson for the Saudi-led coalition in Yemen said on Tuesday, a further sign that the conflict risks spreading into a wider regional war as diplomatic progress stalls.

 Iran threatened the United States with "economic warfare" on Tuesday and said it had fired an advanced missile at US warships, underscoring the risks of further escalation in the war only days after both sides traded blows again.

The six-month-old war has been marked by a cycle of pauses followed by periodic flare-ups, with the US last reporting attacks on Iranian targets on Saturday, when US forces struck three Iranian oil tankers. Iranian state media on Sunday reported that Iran fired the Qassem Basir missile in its attacks on several US vessels.

And despite U.S. attempts to open up the Strait of Hormuz, Iran has continued to disrupt shipping through the critical artery for global oil and gas supplies, with commodity vessel traffic slowing again this week.

The Islamic Republic has vowed to announce a new restricted zone in the Gulf in the coming days, along with maps of a new shipping corridor through the Strait of Hormuz, though it was unclear when details would emerge.