Regional war escalates on multiple fronts as fallout reaches Egypt and Gaza disarmament deal takes shape

The US-Iran war and the Saudi-Houthi conflict have each widened over the past 48 hours, with the fallout now reaching Egyptian soil for the first time even as a potential breakthrough on Gaza emerges.

The big geopolitical update of the morning: US President Donald Trump’s announcement that Hamas has agreed to a disarmament plan that will see the group cede control of Gaza in exchange for Israel also withdrawing from the strip. While neither Hamas nor Israel appear to have commented on or confirmed the plan, the agreement — brokered by Egypt, Qatar, and Turkey — is reportedly planned as a phased withdrawal and disarmament.

Iran and the US exchanged blows early yesterday, as Iran renewed its missile attacks on US forces in the Middle East before Washington responded with fresh strikes on the Islamic Republic, the US Central Command said. The US Treasury sanctioned two Iranian entities Wednesday for allegedly monetizing control of the Strait of Hormuz, escalating pressure on Tehran, the Department said. The move landed the same day Iran said it stopped three commercial vessels in the strait, part of a standoff sharpening as US naval forces work to keep the waterway open.

Saudi Arabia and the Houthis are also escalating their conflict: After the Yemeni group struck Saudi-linked tankers in the Red Sea and claimed hits on Aramco-linked facilities at Jizan and Yanbu, Saudi Arabia launched joint airstrikes with the US on Iran-backed armed groups in Iraq. The strikes, which killed at least 20 fighters and wounded 32, were in retaliation for drone attacks on Saudi oil facilities launched from the Arab country, Reuters reports. Regional officials believe the Houthis attacked Saudi Arabia from Iraqi territory, alongside Iraqi armed groups under IRGC supervision

Baghdad is less than thrilled with the strikes: After condemning the move as a violation of its sovereignty, Iraqi Prime Minister Ali Al Zaidi canceled a trip to Riyadh that had been scheduled for yesterday.

Now, Yemeni sources believe Saudi Arabia could be gearing up for a ground offensive in Central Yemen “to break the chokehold on its oil exports through the southern Red Sea,” the Guardian reports. The Houthis declared a blockade on Saudi shipping nearly two weeks ago.

Riyadh’s institutional answer is a coalition: Saudi Arabia has proposed leading a multinational alliance to protect Red Sea shipping from attacks by the Houthis, Reuters reports, citing unnamed sources. More than a dozen countries — including Egypt, Kuwait, Qatar, Bahrain, Jordan, Turkey, and Pakistan — voiced support for the initiative. Pakistan is broadly expected to support Saudi defense initiatives, particularly after Riyadh has rolled over its USD 5 bn deposit in Pakistan’s central bank for three years.

Egypt’s support for the maritime coalition came as its Damietta Port on the Mediterranean was struck by a drone on Wednesday evening, hitting the US-owned regasification vessel Energos Winter and sparking a fire that then spread to a gas storage vessel connected to it, Prime Minister Moustafa Madbouly said at his weekly presser yesterday. This was the first such attack on Egypt since the war began. The vessel — which was responsible for 6-10% of Egypt’s domestic natural gas needs — is currently offline but the energy system is “unaffected,” with Aqaba co-charter flows in place as a backup, Madbouly said. There’s still no official assessment of how long the vessel will be out of service.

No one has yet claimed responsibility for the attack, although Iran’s Foreign Minister Abbas Araghchi blamed Israel, suggesting this was “false-flag operations designed to undermine regional peace.”

The attack on Damietta is a bit baffling. Egypt’s Ain Sokhna Port has a higher concentration of gas import infrastructure with three regasification vessels docked there, and it’s located on the Red Sea where Iran and the Houthis previously launched drone attacks on ships and Saudi facilities.

Gulf states, frustrated with the limits of US power, are increasingly looking east. Several are testing whether China will use its leverage over Tehran — as both Iran’s biggest trading partner and a major buyer of Crude — to reopen the Strait of Hormuz and Bab Al Mandeb. The results so far appear underwhelming, as China has declined to publicly challenge Iran’s threats to shipping, has said it won’t use force to reopen Hormuz, and has directly engaged with the Houthis to arrange for its own tankers to pass through the southern Red Sea.

On our region’s western flank, a separate crisis is emerging: Thousands of Moroccans swam into Spain’s enclave of Ceuta yesterday, prompting Italian Prime Minister Giorgia Meloni to float suspending Spain from the Schengen area, the Financial Times reports. Some analysts have suggested the mass migration was enabled — or at least allowed — by Moroccan authorities as “retaliation due to improving Spain-Algeria relations.”