AGP Executive Report

Lebanon-Israel Ceasefire Fallout: Hezbollah rejected a US-backed ceasefire, demanding full Israeli withdrawal from Lebanon as Israeli strikes killed at least four and a UN peacekeeper died, while Iran’s IRGC said stability hinges on Israel leaving Lebanese territory. US Politics & Iran War Powers: In Washington, House Democrats and a few Republicans backed a war powers resolution to limit Trump’s Iran military options, but Trump called it “meaningless,” underscoring how the Middle East war is fracturing US politics. Iran’s Hardline Messaging: Iran’s supreme leader said the US and Israel were dealt a “decisive blow” after talks stalled, as negotiations over ending the war and reopening the Strait of Hormuz remain deadlocked. Markets & Energy Shock: Oil and gold swung on ceasefire hopes and renewed tensions; a Fed-linked report said the Middle East oil shock is changing how inflation hits the US economy. Regional Diplomacy: South Korea and New Zealand held vice-minister talks in Seoul, including energy cooperation amid the Middle East conflict. Business & Risk Cover: Fidelis launched a $345m war-risk insurance consortium as demand rises across the region.

Israel-Lebanon Ceasefire Talks: Israel and Lebanon agreed to implement a conditional ceasefire and set up “pilot zones” under exclusive Lebanese Army control, with Hezbollah required to stop firing and withdraw from south of the Litani River—though Israel says strikes could continue if Hezbollah doesn’t comply. US-Iran War Powers: The US House passed a rare bipartisan war powers resolution aimed at curbing President Trump’s Iran military actions, underscoring growing congressional unease as talks remain stalled. Ceasefire Fragility: Iran’s Supreme Leader Mojtaba Khamenei warned against divisions after battlefield defeat, while Trump said an Iran deal could come “within days,” as Iran’s foreign minister insisted there was “no tangible progress.” Aviation Hit: IATA reported global passenger demand fell 3.4% in April, driven by a 46.6% drop for Middle East carriers, as jet fuel costs surged. Energy Shock Spillover: Oil prices stayed near $100 amid Strait of Hormuz worries, while World Bank said global food prices hit the highest since Jan 2024, linked to Hormuz disruption. Regional Economy & Markets: New Zealand’s NZX50 slid on Middle East tension jitters; Indonesia’s rupiah plunged to a record low near IDR18,000 per dollar. Business Moves: KEPCO won a Saudi Jafurah power contract; Algeria’s ADC plans green hydrogen and brine-use studies.

Gulf Flashpoints: Iran struck Kuwait’s airport and hit Bahrain amid a shaky ceasefire, while the US said it carried out defensive strikes near the Strait of Hormuz and on Qeshm Island—pushing Brent above $98 and rattling markets. Lebanon Escalation: Israel’s strikes in southern Lebanon killed at least nine, as Hezbollah fired rockets into northern Israel; Iran’s FM warned any attack on Beirut would trigger a “full-scale resumption” of war. Ceasefire Under Strain: The US and Iran exchanged fresh missile and drone attacks, with negotiations still stalled despite US claims of progress. Oil & Inflation Spillover: The Fed’s Beige Book linked higher inflation pressures to Middle East energy costs, with knock-on effects for shipping, groceries and fertilizer, while Wall Street slid on the renewed risk. Saudi Resilience: The IMF said Saudi Arabia is holding up better than expected thanks to rerouting oil via the East-West pipeline and Red Sea ports, even as the war disrupts momentum. Aviation Safety: Lebanon launched a safety audit of Middle East Airlines after pilot groups raised concerns about flying near airstrikes. EU Budget Flexibility: The EU eased spending rules to give member states room to absorb energy shocks from the war. Qatar Sports Diplomacy: Qatar appointed Fatima al-Kuwari to lead its 2036 Olympic bid file, underscoring sport as a regional diplomacy tool.

Gulf Security: Iran carried out a drone strike on Kuwait International Airport’s passenger terminal, wounding people and forcing a suspension of air traffic, as officials called it “criminal Iranian aggression.” Diplomacy Under Strain: US Secretary of State Marco Rubio told lawmakers sanctions relief would be “condition-based,” tied to Iran giving up nuclear activities, while Iran denied US claims of plots against senior officials. Ceasefire Fatigue: Despite repeated ceasefire announcements across Gaza, Lebanon and Iran, fighting is intensifying, with Israel expanding ground operations in Lebanon and Iran keeping pressure around the Strait of Hormuz. Markets & Energy: Renewed Middle East hostilities pushed oil higher and rattled European stocks; base metals also surged on supply-risk fears. Global Economy: The OECD warned the conflict could drag growth sharply lower and lift inflation if disruptions persist into 2027. South Asia Impact: Pakistan said exports to Middle Eastern markets have fallen sharply, citing disrupted sea and air routes and higher logistics costs. Business Moves: PM Shehbaz approved revised shop and market closing hours in Pakistan, with exemptions for key services.

Israel-Hezbollah Ceasefire Talks: Fighting continued despite a partial ceasefire claim by Trump, as diplomats met in Washington and Rubio said Hezbollah is the main obstacle to a deal; Hezbollah rejected any “partial” arrangement and warned of deeper retaliation. US-Iran Diplomacy Under Scrutiny: Trump insisted Iran talks are still moving “rapidly” after Iranian media said negotiations were suspended; Rubio told senators Iran must accept “severe and long-term” nuclear limits and that technical work could take months, with no sanctions relief without nuclear concessions. Sanctions Pressure on Iran: The US sanctioned Iran’s largest digital asset exchange Nobitex and three others, alleging they support sanctions evasion. Red Sea Shipping Warning: An Iranian intelligence official warned Iran could block the Bab al-Mandab Strait if strikes continue, echoing the Strait of Hormuz pressure. UAE Nuclear Attack: IAEA chief Grossi said the May 17 drone strike on the Barakah plant was “carefully targeted” and could have caused a major incident. Regional Fallout on Costs: Pakistan business confidence fell sharply amid Middle East tensions, while gold prices rose locally as investors weighed the conflict and shifting rate expectations.

Israel-Hezbollah Escalation: Israel struck south Lebanon as Hezbollah fired into northern Israel, even after Trump announced a halt to attacks—leaving the “ceasefire” shaky and Beirut’s southern suburbs again under threat. US-Iran Truce Talks & Hormuz: Trump said a deal to extend the truce and reopen the Strait of Hormuz could come “over the next week,” but reports of Iran suspending talks and renewed fighting kept shipping traffic near a trickle. Maritime Pressure: Shipping executives in Athens warned most cargo firms won’t risk the chokepoint without a clear peace deal, as only a handful of vessels transited. Cyprus-UK Base Tensions: Cyprus escalated its dispute with Britain over RAF Akrotiri, demanding guarantees the bases won’t be used for offensive strikes. Energy & Inflation Spillover: Oil-price swings tied to Middle East uncertainty fed into higher costs abroad—from Dutch manufacturing output prices to Japan’s naphtha shortages and even UK fuel pressures. Oman IPO: OMIFCO plans to sell a 25% stake in a Muscat IPO, banking on fertilizer demand boosted by Hormuz disruption. Business Sentiment in Pakistan: OICCI data showed confidence sliding as Middle East escalation raised fuel costs, inflation, and supply-chain risks.

Iran-US Escalation: Iran suspended US-mediated talks and threatened to fully seal the Strait of Hormuz, after IRGC-linked reporting said Lebanon ceasefire conditions were violated—sparking oil to jump 6–7% and reviving fears of supply shocks. Strait of Hormuz Fallout: OPEC+ analysts told OPEC that disruption could last through year-end even if flows resume quickly, with months needed to return to normal operations. Retaliation Cycle: CENTCOM said it carried out “measured and deliberate” strikes on Iranian radar and command sites after a US drone was shot down, while Iran warned of further action and activated threats across the region. Lebanon Ceasefire Strain: Israel ordered attacks on Hezbollah targets in Beirut’s southern suburbs; Iran warned northern Israel to evacuate, and the UN called an emergency session. Markets & Inflation: UBS said commodity volatility will stay elevated, with gold and base metals supported by inflation and supply risks; the World Economic Forum warned MENA is likely hit hardest. Gulf Nuclear Talks: Kuwait met the IAEA to discuss nuclear safety and peaceful use amid regional stability concerns.

Lebanon Escalation: Israel seized Lebanon’s Beaufort castle and vowed to push deeper against Hezbollah, as airstrikes killed civilians and the UN Security Council is set to meet over the widening offensive. US-Iran Tensions: The US carried out precision strikes on Iranian radar and drone-control sites after Iran shot down a US MQ-1 Predator, while Iran and the IRGC vowed retaliation amid stalled ceasefire talks. Energy Shock: The IMF, World Bank and IEA warned that if Strait of Hormuz shipping doesn’t normalize, global inventories could be rapidly depleted ahead of peak summer demand, raising fuel and fertilizer risks. Regional Power Strain: Iraq may face a summer electricity crunch as damage to Iran’s South Pars gas output cuts supplies; Kuwait approved 1.5GW battery storage sites to ease peak demand. Markets & Costs: Oil jumped over 3% on renewed Gulf attacks, while UK house prices fell as Middle East-driven energy and mortgage pressures hit confidence. Projects & Business: Saudi Arabia’s Umm Al Qura-led consortium won $1.6bn contracts for new Makkah sites, and Rixos Baghdad passed 60% completion despite regional tensions. Tourism Pressure: War-linked jet fuel costs and uncertainty are hurting Southeast Asia’s summer travel outlook, with Cambodia’s Angkor visitors down sharply.

US-Iran Nuclear Talks: Trump says Iran has agreed not to pursue nuclear weapons, while Iran’s lead negotiator warns Tehran won’t sign without securing Iranian rights and says message exchanges are ongoing but no final deal exists. Lebanon Flashpoint: France called for an emergency UN Security Council meeting as Israel presses deeper into Lebanon; fighting continues around Beaufort and across the border. Strait of Hormuz Energy Risk: IMF, World Bank and IEA warn fuel security could worsen this summer if Hormuz shipping doesn’t return to normal, with inventories being drawn down fast. Markets & Inflation Spillover: Global central banks hold firm as energy-driven inflation persists; in the Philippines, May inflation is forecast up to 7.9%, linked to Middle East-linked supply shocks and currency weakness. Human Stories & Rights: Israeli-Bedouin women’s rights lawyer Hanan Alsanah is spotlighted for pushing women into education and the legal profession despite community barriers. Regional Economy: Syria’s president discussed sanctions relief and economic recovery with Trump in a phone call; Kuwait’s media dean attacks Iran’s regional role, urging a weaker Iran without nuclear weapons.

Hormuz Tolls Debate: Qatar opposes permanent shipping tolls in the Strait of Hormuz, saying fees would raise costs for global buyers, but calls short-term, security-linked charges “negotiable.” US-Iran Pressure: The US announced fresh sanctions on Iran’s oil and petrochemical networks while warning it is “more than capable” of resuming war if talks fail. Iran’s Control Claim: Iran says it fully manages Hormuz and requires vessels to follow IRGC-linked rules and navigation channels. Lebanon Escalation: Lebanon’s PM accused Israel of a “scorched earth” approach after new strikes and evacuation orders in the south, as US-mediated talks are set for early June. Gold and Inflation Watch: Gold ended May down about 1.7% amid Middle East-driven volatility and Fed uncertainty; India’s finance ministry warns Hormuz disruption could lift retail inflation via fuel, transport, and food costs. Tourism and Travel: Jordan says low-cost airlines resume July 1 to boost arrivals after regional disruptions; UK travel coverage flags possible cancellations and higher costs tied to Hormuz and route changes. Energy Ripple Effects: Japan reports petroleum-linked shortages spreading beyond distribution issues, with Hormuz-linked supply disruptions cited. Cybersecurity Shift: A Middle East expert says cybercrime is increasingly psychological, exploiting human behavior rather than just software flaws.

US-Iran Deal Standoff: Trump’s advisers met in the White House Situation Room, but no decision was reached on extending the Iran ceasefire and reopening the Strait of Hormuz; Trump says any deal must meet “red lines” on Iran’s nuclear ambitions, while Iran insists nothing is final and judges by actions, not words. Sanctions Pressure: The US rolled out new sanctions targeting Iran’s oil and petrochemical transport networks, hitting entities and vessels tied to Tehran’s “illicit oil economy.” Hormuz Fallout: Global bodies warn the Strait of Hormuz disruptions are draining oil inventories fast, raising fuel and fertilizer prices and threatening food security and growth; Zimbabwe faces a worst-case fertiliser shock if the corridor stays closed or militarised. Regional Security: Israeli forces pushed deeper into southern Lebanon as Israel and Lebanon held direct military talks at the Pentagon, while Hezbollah is not participating. China-India Ocean Angle: A security report argues China’s maritime vulnerability starts at Hormuz, reshaping strategic competition across the Indian Ocean. Defense Spending Push: US Defense Secretary Pete Hegseth urged Asian allies to boost defense budgets to counter China’s buildup at the Shangri-La Dialogue. Energy Cost Ripple: Fiji’s central bank flags Middle East-driven oil price risks feeding inflation and higher living costs. Public Health in Qatar: Qatar’s MoPH launched a hand-hygiene and infection-prevention campaign with WHO support.

US-Iran Ceasefire Decision: President Trump met advisers in the White House Situation Room to make a “final determination” on extending a 60-day Iran ceasefire and reopening the Strait of Hormuz, but Iran says no deal is final and insists it trusts actions, not words. Nuclear and Maritime Terms: Trump’s stated demands include no Iranian nuclear weapon, mine removal, and uranium coordination, while Iran’s top negotiator warned concessions come “through missiles,” not talks. Regional Diplomacy: US Secretary of State Marco Rubio thanked Pakistan for advancing Middle East peace after meeting Ishaq Dar, as Pakistan again rejected any Abraham Accords flexibility without recognition of an independent Palestinian state. Security and Tech Risks: Lawmakers warned CENTCOM about adversaries using commercial phone location data to target US personnel, and separate reporting highlighted Iran-linked concerns about weaponizing subsea cables in the Gulf. Markets and Inflation: Wall Street extended gains on deal hopes, while Fed officials signaled the Middle East war could keep inflation elevated enough to justify future rate hikes; oil saw a sharp May drop amid easing risk expectations. Regional Security Forum: Shangri-La Dialogue opened in Singapore with focus on Iran and Middle East tensions affecting US alliances and regional stability.

US-Iran Ceasefire Watch: Markets steadied as negotiators pushed a draft 60-day ceasefire extension, with the Strait of Hormuz reopening a key prize—though Israel’s strikes on Lebanon and fresh missile incidents kept the region on edge. Lebanon & Gaza Humanitarian Strain: UN officials reported intensified Israeli airstrikes forcing new evacuations in Lebanon and continued aid restrictions in Gaza, with attacks on healthcare adding to the crisis. Energy & Inflation Spillover: Oil and fuel pricing stories kept tying back to Middle East risk—Philippines labor reverted to a five-day workweek from June 1 after energy-saving measures, while aviation demand and costs remained pressured by higher jet fuel prices. Aviation Disruption: AirAsia Indonesia will drop key Australia routes from June 18, citing sustained Middle East-driven jet fuel costs. Regional Finance & Rates: South Africa’s central bank raised rates to 7% amid Iran-war-linked inflation risks, while Qatar’s stock market showed resilience on banking and energy support. Crime & Cyber Crackdown: The FBI seized about $8bn in crypto and arrested hundreds in an international scam crackdown spanning Asia, Africa, and the Middle East. Local Governance: Australia’s housing ministers met to coordinate plans to boost supply and affordability amid broader economic uncertainty.

Israel-Hezbollah Escalation: Israel said it has killed at least 800 Hezbollah members since a mid-April ceasefire, as it expands strikes under its “Lion’s Roar” operation and Lebanon reports thousands of attacks since March. US-Iran Diplomacy: A tentative US-Iran framework would extend the ceasefire by 60 days and start nuclear talks, but hinges on Trump sign-off, while the US says Iran must remove mines and won’t be allowed to impose Hormuz tolls. Hormuz Pressure on Oman: US Treasury chief Scott Bessent threatened sanctions on Oman if it supports any Strait of Hormuz tolling scheme, after Trump warned Muscat it could be “blown up.” Energy Shock & Markets: The IEA warned the Hormuz crisis is reshaping global energy investment, and inflation data in the US pointed to faster price growth tied to the Iran war and higher energy costs. EU Aid for Food Costs: Brussels approved Spain’s €500m fertilizer-cost support plan for farmers, covering up to 70% of extra costs linked to the Middle East crisis. Regional Politics: Qatar’s emir spoke with Trump about de-escalation and dialogue, while India’s Jaishankar and Saudi FM met in Cyprus to coordinate on Middle East maritime security. Economy & Trade Hits: Toyota said exports to the Middle East plunged 91.7% in April, as airlines suspend routes and consumer confidence strains spread.

US-Iran Tensions: Fresh U.S. strikes hit Iran, including a drone-control site near Bandar Abbas, as Washington says actions are defensive while Iran-linked missiles and drone threats keep the Strait of Hormuz in focus. Markets & Energy: Oil jumped and gold slid as investors weighed ceasefire hopes against renewed attacks; European and Asian stocks fell on the same uncertainty. Regional Diplomacy: South Korea said the missile that struck a Korean-operated vessel near Hormuz was likely Iran’s Noor-series, while Seoul also met Singapore on peninsula security and freedom of navigation. Economic Spillovers: Toyota reported a 91.7% plunge in April exports to the Middle East, underscoring how the conflict is hitting trade. Policy & Finance: The ECB warned euro-area financial stability risks are rising from the Middle East energy shock, while Bank of Korea lifted its 2026 growth forecast to 2.6% on strong chip exports despite the war’s drag. Gaza Funding: AFP reports Trump’s “Board of Peace” Gaza reconstruction fund is empty, raising questions about promised financing.

US-Iran Talks & Strait of Hormuz: President Trump said Iran is “negotiating on fumes” and that the US is “not satisfied” with the draft terms reported by Iranian state TV, even as a fragile ceasefire holds and markets watch for any reopening of shipping lanes. Gaza Reconstruction Funding: AFP reports Trump’s “Board of Peace” Gaza fund has “zero dollars” in its World Bank account despite billions pledged, raising doubts about whether reconstruction can start. Middle East Pressure on Global Economy: Analysts and officials warn the conflict is feeding inflation and financial stability risks, with energy and shipping disruptions continuing to ripple through consumer prices and trade. Diplomacy via Partners: Pakistan’s Shehbaz Sharif said Iran appreciated Pakistan’s role in negotiations, while Rubio said there’s “some progress” and more will be judged in the coming hours. Regional Energy & Climate: EU and regional energy moves include hydrogen-ready pipeline planning (Italy–Türkiye) and renewed focus on climate impacts as heatwaves and energy costs intensify. Aid & Finance: The IMF approved a $695m boost for Sri Lanka, citing fuel and electricity reforms amid wider crisis-linked inflation pressures.