US and Iran stand down for now with crucial talks set for Tuesday in Qatar

Asian stocks were mixed and oil prices edged up as reports said the United States and Iran had agreed to stop attacking each other following a weekend of strikes that threw their fragile truce into question.

Oil prices, which last week fell to pre-war levels, rose Monday, with West Texas Intermediate adding more than one per cent.

Equity markets fluctuated, with Hong Kong, Sydney, Wellington, Taipei and Manila up but Tokyo, Seoul, Shanghai, Singapore and Jakarta down.

Tech firms were again in the spotlight after leading hefty losses last week, with South Korean chip makers SK hynix and Samsung taking the brunt of the selling.

The tech rally has sent Seoul, Tokyo and Wall Street's three main indexes to record highs this year, with SK hynix alone soaring 300 percent in the first six months of the year.

Saudi Crown Prince and Prime Minister Mohammed bin Salman bin Abdulaziz Al Saud received a phone call from French President Emmanuel Macron, during which they discussed regional and international developments, the Saudi Press Agency (SPA) reported.

According to SPA, the two leaders reviewed the latest developments regarding the memorandum of understanding (MoU) signed between the United States and Iran, as well as ongoing efforts to facilitate comprehensive solutions that would enhance security and stability in the region.

They underscored the importance of ensuring freedom of navigation and supporting diplomatic efforts to de-escalate tensions, Xinhua news agency reported.

The two sides also discussed bilateral cooperation and exchanged views on other regional and international issues of common concern.

The United States and Iran have agreed to stop attacking each other, American media reported citing senior US officials, and plan to meet Tuesday in Qatar to resolve their dispute over the Strait of Hormuz.

The US and Iran have traded strikes in recent days despite a fragile June 17 memorandum of understanding aimed at ending the conflict that began in late February and disrupted shipping through the vital waterway.

Under that agreement, Tehran committed to allow safe passage of commercial vessels through the Strait of Hormuz while Washington agreed to lift its blockade of Iranian ports.

"We decided to stop all the kinetic activity," a senior US official told media outlet Axios on Sunday, using a military term for strikes.

A second American official told Axios both sides will stand down "for now" and that "vessels can move freely" as talks are set to continue.

Both US officials and a third source with knowledge confirmed Tuesday's meeting in Qatar, Axios said.

CNN reported similar comments from a Trump administration official, saying the two sides will "stand down for now" and that they have agreed to meet in Doha on Tuesday for further discussions.

The Israeli army destroyed an extensive tunnel in southern Lebanon on Sunday, with Lebanese state media reporting strikes in the area and Iran-backed Hezbollah saying it reserves the right to respond to those attacks.

"The tunnel, stretching more than 200 metres and reaching a depth of over 25 metres, contained hundreds of weapons as well as several launch shafts intended to target the State of Israel," Prime Minister Benjamin Netanyahu and Defence Minister Israel Katz said in a joint statement.

In response to the attacks, Hezbollah said it "reiterates that what the enemy has done is a blatant violation of the ceasefire to which it has adhered until now, and that it is monitoring and tracking these violations, and reserves its right to defend its homeland and its people".

Technical talks on implementing the US-Iran memorandum of understanding remain scheduled despite the latest military exchanges between the two countries, a senior US administration official told CNN late on Sunday.

"Nothing has been canceled. Technical talks regarding the implementation of the MoU are on track for the coming days as planned, and deconfliction channels are up and running after the Lake Lucerne Summit," the official said, referring to the recent round of negotiations in Switzerland.

The renewed exchange of strikes has put the fragile agreement under increasing strain. President Donald Trump warned that the United States would respond with additional military action if Iran continues attacking US interests, while Tehran cautioned that any violations of the ceasefire would "result in the complete halt of all diplomatic processes."

The memorandum of understanding, signed earlier this month, established a framework for reopening the Strait of Hormuz to commercial shipping, easing selected financial restrictions on Iran and launching technical negotiations over the future of Tehran's nuclear program.

The agreement also triggered a 60-day negotiating period during which US and Iranian officials aim to finalize a broader accord covering nuclear safeguards, sanctions relief and long-term regional security.

Despite a sharp escalation in military exchanges across the Gulf, US and Iranian officials say diplomatic negotiations remain on track, underscoring the unusual reality of a conflict in which both sides are trading attacks while keeping channels for a broader peace agreement open.

The latest crisis erupted after Iran launched drones and missiles toward US military facilities in Bahrain and Kuwait following American retaliatory strikes on Iranian military sites.

US officials said none of the Iranian drones or missiles successfully struck their intended targets. Most were intercepted by US and allied air defenses, while others failed before reaching their destinations. American officials also reported no US casualties.

Despite the exchange of fire, negotiators are still expected to meet in Qatar this week to continue technical discussions aimed at preserving the fragile ceasefire framework and advancing a broader agreement covering Iran's nuclear programme, sanctions relief and security in the Strait of Hormuz.

Mediators from Qatar and Pakistan continue to push both sides to keep diplomacy alive even as military pressure intensifies.

The latest flare-up has also widened the regional conflict. Iran warned it could suspend negotiations if further US strikes continue, while Israel has stepped up operations against Hezbollah in Lebanon, prompting a parallel race by Israel's military and technology sector to strengthen defences against increasingly sophisticated drones, precision missiles and electronic warfare threats posed by the Iran-backed militant group.

The Gulf states have increasingly found themselves on the front lines of the confrontation. Bahrain and Kuwait, both hosts to major US military facilities, became direct targets of Iranian retaliation, highlighting how America's regional partners remain vulnerable even when attacks are intercepted.

The renewed exchanges have also reignited concerns over commercial shipping through the Strait of Hormuz, a vital artery for global oil exports, although negotiators insist efforts to stabilize maritime security remain part of the ongoing talks.

Ahmed Aboul Gheit, Secretary-General of the League of Arab States, has once again strongly condemned the continued Iranian attacks carried out against the Kingdom of Bahrain and the State of Kuwait using missiles and drones, describing them as a flagrant violation of sovereignty, international law and the Charter of the United Nations.

In a statement issued on Sunday, Aboul Gheit stressed the need for the immediate cessation of all Iranian hostile acts targeting the Gulf states and threatening regional security and stability, holding Iran fully responsible for its unlawful actions, which undermine regional and international diplomatic efforts aimed at achieving peace in the region.

Technical talks on the US–Iran memorandum of understanding remain “on track” despite recent exchanges of fire, a senior US administration official said on Sunday, according to CNN.

The official said no meetings had been cancelled and that discussions on implementing the MoU are still scheduled to proceed in the coming days as planned.

They added that deconfliction channels remain active following the Lake Lucerne summit in Switzerland, where talks were led on the US side by Vice President JD Vance.

Iran has warned regional countries against allowing their territory or facilities to be used for attacks on its soil, Foreign Minister Abbas Araghchi said on Sunday, according to the semi-official Tasnim news agency.

He stressed that regional governments must play a role in safeguarding peace and security, particularly by preventing “aggressor parties” from using their territory or infrastructure to launch what Tehran called unlawful attacks on Iran.

Day 121: Iran warns against attacks from regional territory

Day 120: US–Iran ceasefire under strain as drones target Bahrain

Day 119: Lebanon, Israel, US sign trilateral deal in Washington

Day 118: Oil price spikes after IRGC strike on ship in Hormuz

Day 117: Iran-Gulf reconciliation talks expected in Saudi Arabia