WASHINGTON/DUBAI/TEL AVIV/BEIRUT (Reuters) – Relief over a truce between the United States and Iran gave way on Wednesday to alarm that fighting was still raging across the region, as Israel launched its biggest attacks yet on Lebanon, and Iran struck Gulf neighbours’ oil facilities.
World financial markets rose after President Donald Trump announced the agreement late on Tuesday, two hours before a deadline he had set for Iran to open the blockaded Strait of Hormuz or face the destruction of its “whole civilisation”.
But even as Israel and the United States paused their attacks on Iran, Israel escalated its parallel war in Lebanon, launching what it described as its biggest strikes yet, sending huge columns of smoke above Beirut as buildings crumpled.
Lebanon’s health minister said hundreds had been wounded. Residents said the Israeli strikes had come without the usual warnings for civilians to evacuate.
Long after the ceasefire was meant to take effect, Kuwait, the UAE and Bahrain all reported fresh Iranian missile and drone strikes, several of which targeted oil, power and desalination infrastructure vital to the region.
An oil industry source said Saudi Arabia’s huge east-west pipeline to the Red Sea had been hit, and damage was being assessed.
The pipeline is the main route by which some oil, at least, has been able to bypass the blockaded strait.
Global markets heave sigh of relief at truce
Nevertheless, at 13:37 GMT the Brent crude oil benchmark , which had risen by more than 50% since the war began, was down around 16% on the day, below $92 a barrel.
US stocks surged to one-month highs, joining a major global relief rally.
Though the United States and Iran both declared victory, their main disputes remained unresolved, each sticking to competing demands for a deal that could shape the Middle East for generations.
The Strait of Hormuz remained shut. A senior Iranian official involved in the discussions told Reuters Tehran could open it on Thursday or Friday ahead of peace talks.
But any opening would be conditional on a framework for the ceasefire being agreed, and be “limited” – with ships still requiring Iran’s permission to pass.
Pakistani Prime Minister Shehbaz Sharif said he had invited Iranian and US delegations to meet in Islamabad on Friday, and that Iran’s president had confirmed Tehran would attend.
But there was no official confirmation from Washington of plans to attend in-person talks.
The White House said no meeting would be considered official until formally announced.
US Vice President JD Vance, seen as the potential head of an American delegation, said Trump had told negotiators to try to reach an agreement, though Vance stopped short of confirming talks at any specific time or place.
In a flurry of online posts, Trump announced new tariffs of 50% on all goods from any country that supplies Iran with arms.
He insisted that Iran had undergone “regime change” and that it would agree not to enrich uranium, which can be used in nuclear warheads.
Defence Secretary Pete Hegseth said Washington had won a decisive military victory, and that Iran’s missile programme had been functionally destroyed.
Iran’s ruling establishment survives
Crowds took to the streets of Iran overnight to celebrate, waving Iranian flags and burning flags of the United States and Israel. But there was also wariness that a deal would not hold.
“Israel will not allow diplomacy to work and Trump might change his view tomorrow. But at least we can sleep tonight without strikes,” Alireza, 29, a government employee in Tehran, told Reuters by phone.
The war was launched on February 28 by Trump and Israeli Prime Minister Benjamin Netanyahu, who had announced they aimed to prevent Iran from projecting force beyond its borders, end its nuclear programme and create conditions for Iranians to topple their rulers.
But so far Iran retains both its stockpile of near-weapons-grade highly enriched uranium and its ability to hit its neighbours with missiles and drones.
The clerical leadership, which faced a mass uprising months ago, withstood the superpower onslaught with no sign of domestic opposition.
And Tehran’s newly proven ability to cut off Gulf energy supplies through its grip on the strait, despite the massive US military presence built across the region over decades, could reshape the power dynamics of the Gulf for years.
“The enemy, in its unjust, illegal and criminal war against the Iranian nation, has suffered an undeniable, historic and crushing defeat,” Iran’s Supreme National Security Council said in a statement.
Netanyahu’s office said Israel supported the decision to suspend strikes on Iran for two weeks. But the agreement is a blow for the Israeli leader, who had repeatedly said he wanted Iran’s rulers to fall.
Yair Golan, a former Israeli military deputy chief of staff, called the outcome a “complete failure that endangered Israel’s security”.
“The nuclear programme was not destroyed. The ballistic threat remains. The regime is still intact and is even emerging from this war stronger,” he wrote on X.
