Market Watch: Likud Rejects Election Loss as Gulf Braces for Iran Strike

The Wall Street Journal reported on Wednesday that Washington has advised several Gulf Arab states to prepare for a short but intense military offensive against Iran following the United States midterm elections scheduled for 3 November. This development coincides with a sharp rise in regional political friction that could influence energy security and market sentiment in the Middle East.

In Israel, Prime Minister Benjamin Netanyahu’s Likud party declared the recent election stolen by Arab parties after failing to secure the majority required to form the next government. The party’s assertion adds to the uncertainty surrounding the composition of the new cabinet, a factor investors monitor closely for policy continuity on fiscal and security matters.

Yair Golan, leader of the Democrats party, stated on Wednesday that the Arab-led Ra'am party could participate in a governing coalition. Golan expressed readiness to cooperate with an opposition-led government to remove Netanyahu from power, though he indicated his party would not join such a coalition outright. This stance contrasts with Netanyahu’s description of any alliance involving Arab parties as forbidden.

Ahmad Tibi, co-leader of the Arab Joint List party Hadash-Ta'al, rejected Likud’s claim of a stolen vote in comments to Al Jazeera. He characterized the accusations as the rhetoric of the defeated, offering a counter-narrative to the ruling party’s position.

Iranian Foreign Minister Abbas Araghchi said Tehran will maintain close contact with intermediaries to allow diplomacy to proceed, even as armed forces remain ready to defend the country. Meanwhile, the US military stated that reports in Iranian media regarding commercial ships hitting sea mines in the Strait of Hormuz were false, a clarification aimed at stabilizing shipping insurance and logistics costs.

In southern Lebanon, the Israeli army struck the municipality of Deir Mimas after issuing a warning about a massive explosion near the town. Hezbollah Secretary-General Naim Qassem issued a statement rejecting calls to disarm the group under a June framework agreement with Israel brokered by the United States. Qassem described the demands as a violation of Lebanon's sovereignty.

Air traffic was halted in Yemen after Aden airport was targeted with two missiles. The attack followed an evacuation warning from the Houthis and resulted in civilian injuries and material damage to the facility.