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Israel feels its interests "abandoned" in US-Iran deal: analysts

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Israel feels its interests "abandoned" in US-Iran deal: analysts

2026-06-25 04:26 Last Updated At:07:17

The recently signed memorandum of understanding (MoU) between the United States and Iran has sparked major concern among Israeli officials, who fear that Israel's interests are being abandoned by its most crucial ally, according to analysts.

The development comes as Israel braces for a pivotal election later this year, with Prime Minister Benjamin Netanyahu potentially facing severe political fallout from the agreement.

"Israel views the MoU signed with Iran as a complete capitulation where the Americans were desperate to reach a deal because they clearly failed abysmally to plan for the blocking of the Strait of Hormuz. So they feel that all of Israel's interests have been abandoned," said Dan Perry, an American world affairs and political analyst.

Following the signing of the MoU, Iran and the United States held the first round of high-stakes indirect talks, mediated by Pakistan and Qatar, at the Swiss mountain resort of Buergenstock on Sunday.

On Monday, mediators announced encouraging outcomes from the talks, including a 60-day roadmap toward a final deal, and mechanisms to ensure the security of commercial shipping through the Strait of Hormuz and to end the fighting between Israel and Hezbollah, a close ally of Iran in Lebanon.

However, there have been concerns that Israel may jeopardize the negotiations.

"No doubt that the Americans, some of the Americans, definitely some of the Americans that are negotiating, like the Vice President JD Vance, think that Israel can put some obstacles and jeopardize the negotiations," said Yaki Dayan, former Israeli consul in Los Angeles.

With Israeli elections looming later this year, Netanyahu's core strategy to get re-elected was to portray the very good relations he holds with U.S. President Donald Trump. However, the MoU and the ensuing negotiations between the U.S. and Iran may dramatically affect the election results.

"Unless something dramatically changes, this is devastating for Netanyahu, not only because he pursued a strategy that has failed - the Iranian regime still stands, the nuclear program still exists, Hamas and Hezbollah are still fighting against Israel, but also because he was long perceived as Mr. America, with his incredible eloquence in American English. He could run circles around any American president to get America to do Israel's bidding," said Perry.

Perry added that instead of maintaining that influence, Netanyahu has brought Israel to an unbelievably low point in its relationship with the United States.

Although Netanyahu did practically everything to persuade the U.S. to withdraw from the previous Iran nuclear deal signed more than a decade ago under President Barack Obama, analysts doubt that he can repeat it again this time because Israel and its prime minister rely entirely on just one side of the American political spectrum.

"When you look at alternatives now, you don't have because Israel has lost the Democratic side as well. So you don't have an alternative in the American politics," said Dayan.

Israel feels its interests "abandoned" in US-Iran deal: analysts

Israel feels its interests "abandoned" in US-Iran deal: analysts

The oil price shock triggered by the war in the Middle East could reduce euro-area GDP growth by around 0.4 percentage points over the first year following the shock, according to a European Central Bank (ECB) study released on Wednesday.

Since the outbreak of the war in late February, disruptions to oil flows through the Strait of Hormuz and reduced oil supply from the Middle East have pushed crude prices sharply higher, said the study.

It added that the increase in oil prices triggered by the current shock has so far been larger than that observed after the Russia-Ukraine conflict in 2022, although it remains smaller than the rise seen during the Gulf War in the early 1990s.

The ECB said higher oil prices are likely to weigh on the euro-area economy through rising production costs, lower household purchasing power, weaker global demand and heightened uncertainty.

Based on historical evidence, the ECB estimated that a geopolitical oil supply shock that raises real oil prices by 10 percent could reduce euro-area GDP growth by around 0.2 to 0.3 percentage points in each of the three years following the shock.

The study found that the impact on investment is likely to be more pronounced than that on private consumption. According to the ECB, heightened geopolitical uncertainty may prompt firms to delay expansion plans, equipment purchases and hiring decisions, dampening investment activity and amplifying the impact on economic growth.

The ECB noted that the euro area's dependence on oil has declined over time, but the response of investment to geopolitical oil supply shocks appears to have remained broadly stable.

The study cautioned that the overall impact of the current shock remains highly uncertain and will depend on the magnitude and persistence of the oil price increase. A prolonged period of elevated oil prices, broader supply-chain disruptions or spillovers into gas markets could further intensify downward pressure on euro-area growth.

Middle East oil shock could cut euro-area growth by 0.4 percentage points in first year: ECB

Middle East oil shock could cut euro-area growth by 0.4 percentage points in first year: ECB

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