Gaza Truce Unravels as Regional Pressure Mounts; Iraq Seals Oil Pipeline Deal, Oil Majors Post Strong Results

Ceasefire Accusations, Diplomatic Moves, and Energy Deals

Saudi Arabia, the UAE, Qatar, Egypt, Jordan, Turkey, Pakistan and Indonesia jointly condemned Israel for ongoing military strikes in Gaza, more than nine months after the U.S.-brokered ceasefire was meant to take effect. The group cited attacks on civilians, healthcare facilities and infrastructure that have killed over 1,200 Palestinians, according to Gaza health authorities. Israeli forces have also returned to areas they had agreed to vacate, and humanitarian aid remains below agreed levels. Israel maintains that Hamas has violated the truce by rebuilding tunnels, recruiting fighters and rearming, and refuses to complete its withdrawal until Hamas disarms.

Separately, Hezbollah has publicly signaled its willingness to engage in talks with Syria for the first time, complicating Washington’s push for Damascus to help disarm the Lebanese group. Syria has rejected military intervention but supports Lebanese state control over weapons and would likely back stepped-up interception of arms shipments bound for Hezbollah. Intelligence cooperation between Damascus and Beirut is reportedly expanding, which U.S. officials see as a more sustainable path. However, Damascus views Islamic State as the more immediate threat and is reluctant to open a conflict with Hezbollah inside Lebanon.

On the energy front, Iraq and Turkey signed a one-year deal allowing up to 750,000 barrels per day of crude to flow through the Kirkuk-Ceyhan pipeline, giving Baghdad an alternative to the Strait of Hormuz after Iran effectively closed the waterway earlier this year. The pipeline currently carries only about 170,000 bpd, mostly from Kurdistan region fields, but the agreement keeps Iraq’s sole functioning Mediterranean export route open. Meanwhile, ExxonMobil offered Kazakhstan an $80 billion expansion of the giant Kashagan field in exchange for resolving government claims worth around $150 billion. The proposal would create a 50-50 venture with KazMunayGas, targeting up to 600,000 bpd. Petrobras also confirmed a deepwater gas find offshore Colombia near recent discoveries, while U.S. oil majors reported blowout earnings.

Phillips 66 saw a 339% surge in second-quarter profit to $3.8 billion, driven by refining margins that more than doubled to $24.08 per barrel. Chevron beat estimates with adjusted earnings of $6.06 per share and record U.S. upstream production. ExxonMobil reported $14.5 billion in profit, helped by record Permian output and strong refining, and said it is on track to start a fifth Guyana FPSO later this year. Occidental Petroleum posted an 823% jump in adjusted earnings to $2.40 per share, raised its dividend, and cut debt.

What the Regional Tensions and Sector Moves Signal

The Gaza ceasefire’s unraveling keeps the broader Middle East on edge, though markets have so far viewed the conflict as contained. A wider escalation that involved Hezbollah and Syria would elevate risks to energy infrastructure and shipping, but the current dynamics suggest limited spillover. Hezbollah’s diplomatic overture to Syria appears to be a tactical hedge rather than a precursor to conflict, and the strengthening intelligence cooperation against the group could eventually curb its military capabilities without immediate instability.

Iraq’s pipeline deal with Turkey is a direct response to the Hormuz disruption earlier this year, which slashed Iraqi oil revenues from roughly $6 billion to under $2 billion per month. The agreement preserves the Kirkuk-Ceyhan route while the two governments negotiate a longer-term arrangement, and plans to eventually link southern oil fields to the northern system would create a permanent alternative to Persian Gulf exports—potentially reshaping Iraq’s energy infrastructure and reducing its vulnerability to Hormuz choke-point risks.

ExxonMobil’s $80 billion Kashagan proposal illustrates how resource-rich nations are leveraging environmental and delay claims to renegotiate project terms. If approved, the deal would resolve years of disputes and unlock billions of barrels of oil, but it still requires political sign-off in Kazakhstan. The string of strong oil company earnings, driven by elevated crude prices and wide refining margins, highlights the ongoing profitability of the sector, even as geopolitical risks simmer. Phillips 66’s debt reduction and shareholder returns, along with Chevron’s and ExxonMobil’s production records, underscore the financial muscle the industry has rebuilt since the 2020 downturn.