Skip to content
You can now search across every topic, entity and event.What's new
European Oil Markets
1JUN

Israel rejects a deal it never signed

3 min read
09:19UTC

Netanyahu said Israel had been saved from annihilation, then admitted he had not read the memorandum's text. Ben-Gvir called it non-binding; Smotrich demanded Beirut demolitions; Gantz called the whole thing a strategic failure.

← Back to EFS compression is a China hole, not HormuzJump to analysis ↓
EconomicDeveloping
Key takeaway

Israel's whole political spectrum rejected the memorandum, and none of the objectors carries a signature Geneva can bind.

Prime Minister Benjamin Netanyahu told a press conference Israel had "saved itself from annihilation", then admitted in the same appearance that he had not seen the memorandum's text. 1 He confirmed Israeli forces would stay in southern Lebanon regardless of the deal. Israel signed nothing in Islamabad and is not a party to the instrument, yet its government spent the signing weekend rejecting terms it says it has not read.

The coalition went further than the prime minister. National Security Minister Itamar Ben-Gvir posted that "Trump's agreement does not bind us in any way". Finance Minister Bezalel Smotrich called for ten buildings in Beirut destroyed for every drone Hezbollah fires, extending the threat to Tyre, Sidon and the Bekaa. The objections were not confined to the right: opposition leader Benny Gantz, a former defence minister, called the deal a "strategic failure". 2

Trump had publicly threatened Netanyahu only days earlier over Israel's strike on the Karun field , so an Israeli repudiation of his memorandum reads as defiance in Washington as much as in Jerusalem. A ceasefire announced over a government that depends on ministers who reject any Lebanon withdrawal rests on whoever can compel Israel, and the one actor with that leverage has not used it.

Deep Analysis

In plain English

Washington and Tehran signed the Islamabad MOU; Israel was excluded from the Islamabad negotiations and received no advance text before 15 June. But its terms affect Israel directly because Iran has armed and backed Hezbollah in Lebanon, and the MOU is supposed to bring all that fighting to an end. Netanyahu said on 15 June that Israel had 'saved itself from annihilation' but admitted he had not read the text. National Security Minister Ben-Gvir said the deal does not bind Israel. Finance Minister Smotrich called for ten Beirut buildings destroyed per Hezbollah drone. Opposition leader Gantz called it a strategic failure. Right and centre in Israel each rejected the same agreement, for different reasons.

Deep Analysis
Root Causes

Netanyahu's coalition structure drives the MOU rejection pattern. Ben-Gvir's Otzma Yehudit (Jewish Power party) and Smotrich's Religious Zionism party together hold enough Knesset seats to collapse the government if Netanyahu implements a deal that withdraws IDF forces from Lebanon or Gaza. These parties ran on a platform of permanent IDF presence in occupied territory; accepting an MOU that even implies eventual withdrawal would trigger a coalition crisis.

Gantz's opposition rejection from the centre adds a different dimension: he left the emergency war cabinet in June 2025 and bases his objection on the deferred nuclear terms rather than coalition politics. Leaving 440.9 kg of HEU inside Iran under no inspection for 60 days is Gantz's stated grounds, a position that overlaps with Israeli security establishment concerns rather than settler ideology.

What could happen next?
  • Risk

    Smotrich's demand for ten Beirut buildings destroyed per Hezbollah drone, if acted on, would trigger the Lebanon violation clause Araghchi has already invoked, giving Iran legal cover to exit the MOU.

    Immediate · Assessed
  • Consequence

    Netanyahu's admission that he had not read the MOU text confirms Israel received no advance consultation; Washington must now decide whether to pressure Israel publicly or accept a deal its closest ally openly repudiates.

    Short term · Assessed
  • Risk

    Ben-Gvir's and Smotrich's public repudiation creates a political record that Netanyahu can cite domestically to justify non-compliance without formally withdrawing from a deal he never signed.

    Medium term · Suggested
Sources:The Hill
Mentions:Benjamin Netanyahu →Itamar Ben-Gvir →Israel Defense Forces (IDF) →Washington Institute for Near East Policy →Islamabad →Menachem Begin →Geneva →Iran →Lebanon →Egypt →Israel →Hezbollah →Beirut →Tyre →Washington →Sidon →Tehran →Bezalel Smotrich →Benny Gantz →Knesset →Islamabad Memorandum of Understanding →
First Reported In

Update #129 · Iran deal signed, but no paper to show

The Hill· 16 Jun 2026
Read original →
Causes and effects
Caused by
Hezbollah fired on Israel hours after signing
Israel's across-the-board rejection of the MOU coincided with Hezbollah combat that its own officials refused to halt.
Occurred 15 Jun 2026
Read story →
This Event
Israel rejects a deal it never signed
A ceasefire is being signed in Geneva over the head of the party still doing the fighting, with no Israeli signature anyone can hold.
Led to
Netanyahu sidelined by the deal on Iran
The 15 June cabinet rejections by Netanyahu, Ben-Gvir, Smotrich and Gantz escalated into broader Israeli and international commentary framing the MOU as a referendum on Netanyahu's tenure.
Occurred 16 Jun 2026
Read story →
Different Perspectives
Indian refiners
Indian refiners
Indian refiners kept lifting discounted Urals as the India/Baltic price split widened past $9-10 a barrel, a gap that only grows as GL X1's Iranian wind-down cuts an alternative discounted grade off the market by 17 July. Cheaper Russian feedstock is being locked in while it lasts.
Chinese refiners
Chinese refiners
Chinese refiners gain leverage as the Urals-Brent discount widens, since Beijing's state buyers already source discounted Russian barrels near the fiscal floor unaffected by Western insurance costs. A wider discount, if it holds past 23 July, lets them lock in cheaper term contracts regardless of the cap's outcome.
US money managers (CFTC-tracked)
US money managers (CFTC-tracked)
Managed money trimmed WTI net length into the rally, positioning that reflects doubt the Hormuz premium survives without freight or war-risk confirmation. The Brent-WTI spread widening almost entirely on the Brent leg supports that scepticism about a broad-based repricing.
OPEC+ (Saudi-led subgroup)
OPEC+ (Saudi-led subgroup)
Saudi Arabia is defending market share through a fourth straight 188kbd August hike even as OPEC's own July MOMR cut 2026 demand growth for the fourth consecutive month. At a $108-111 fiscal breakeven, every added barrel costs Riyadh revenue it cannot recoup, so the hike reads as a positioning signal, not a demand bet.
Greek shipping registries
Greek shipping registries
Greece, backed by Cyprus and Malta, is pushing a three-month cap-freeze compromise against the Commission's freeze to January 2027 ahead of the 23 July vote. Athens' and Valletta's combined tanker registrations mean a shorter review gives their insurers more frequent chances to reprice risk on Russian cargoes.
Russia (Deputy PM Alexander Novak)
Russia (Deputy PM Alexander Novak)
Novak extended the diesel export restriction to producers on 8 July, the first producer-binding curb of the war, protecting the domestic pump price ahead of any refinery repair timeline. Urals still trades below Russia's $59 budget floor even as Brent gained, so the ban trades export revenue for fiscal stability at home.