HEADLINES IN BRIEF

A new exchange of fire with Iran in the Gulf tests the fragile ceasefire. READ MORE BELOW

Iran says it had targeted a US air base and Navy. READ MORE BELOW

Deals remain elusive as fighting in Lebanon hinders talks. READ MORE BELOW

The US eyes Iranian assets to help with Gulf allies' reconstruction, according to reports. READ MORE BELOW

OPEC+ is set to agree to a fourth consecutive increase in oil output targets. READ MORE BELOW

IN DETAIL

A new exchange of fire with Iran in the Gulf tests the fragile ceasefire

Iran fired ballistic missiles and drones toward Bahrain and Kuwait that were intercepted early on Saturday, Bahrain's government said, and called on Tehran to halt attacks on Gulf neighbors that test a fragile ceasefire in the Middle East conflict.

Iran said that it targeted American military assets in both countries, after the US attacked surveillance facilities on Qeshm Island and near Sirik that Iran claimed were used to protect borders and "ensure the security of navigation in international waters".

Tehran called the attack a ceasefire violation.

Later on Saturday, US Central Command said US forces had shot down two Iranian attack drones over the Strait of Hormuz.

The latest exchanges came as the Trump administration presses Iran to make a deal to end the war, which has strained the global economy and threatened a hunger crisis in some of the world's most vulnerable countries.

Pakistan's interior minister, Mohsin Naqvi, arrived in Iran on Saturday as part of mediation efforts.

Meanwhile, the US is seeking to ratchet up economic pressure on Iran.

The US Treasury Department is considering allowing Gulf allies to tap into frozen Iranian assets to pay for damages they sustained in the war, according to media reports.

Iran says it targeted US air base and Navy

The US military said earlier that it had shot down several Iranian missiles and drones launched toward the Strait of Hormuz and Gulf Arab allies, and struck some of the Islamic Republic's coastal surveillance radar sites in response.

Iran's Revolutionary Guard said it had targeted the Ali Al Salem air base, which hosts US forces in Kuwait, and the US Navy's 5th Fleet in Bahrain, according to the state-run IRNA news agency.

The US military said there were no reports of harm to US personnel.

Earlier in the week, Iranian drones heavily damaged a passenger terminal at Kuwait's main airport, killing one person and wounding dozens.

The US military kept up its blockade on Iranian ports in response to Tehran's grip on the strait, a crucial corridor for global oil and natural gas shipments.

Energy prices have spiked, posing political problems for US President Donald Trump's Republican Party before the midterm congressional election.

Deals remain elusive

US and Iranian negotiators reached a tentative agreement a week ago to extend the ceasefire by 60 days and start a new round of talks on Iran's nuclear program.

Trump, however, has called for unspecified changes, and Iranian officials have shown no public sign of agreeing to the deal.

The fighting in Lebanon, where Israeli forces have seized large swaths of the south while saying it targets the Iranian-backed Hezbollah militant group, also challenges efforts to end the Iran war and reopen the Strait of Hormuz.

Iran has demanded that any lasting truce extends to Lebanon.

The Trump administration has touted the latest ceasefire agreed to earlier in the week by the Lebanese government and Israel after US-brokered talks in Washington.

However, Hezbollah has rejected the agreement.

Ratcheting up financial pressure

Miad Maleki, a senior fellow at the Foundation for Defense of Democracies and former Iranian sanctions expert at the Treasury Department, said it's significant that the US is signaling it could allow Gulf countries to access some of the $24bn in frozen Iranian assets stored abroad.

Iran had been seeking some of the funds as part of a deal, and rather than offering Tehran that concession, the US is pressuring them to move quickly.

"So the US government is saying: 'Hey, not just that we're not going to give you these funds. As a matter of fact, we're going to take these funds from you, and we're going to help Gulf states to take it," Maleki said.

Allowing Gulf states to use the frozen assets would also bolster US ties there, he said.

It would send a clear signal that America is sticking with its partners as they've sustained attacks and repercussions from the war.

However, Maleki said some Gulf states may be reluctant to use the funds out of concern that they could face retaliation from Iran for doing so.

OPEC+ set for fourth oil quota hike since Hormuz closure

OPEC+ is set to agree on Sunday a fourth increase in oil output targets in as many months, according to Reuters, even though the US war with Iran is still preventing several of the group's members from pumping more.

The war has cut oil flows via the Strait of Hormuz, creating the world's biggest ever supply crisis as key OPEC+ members including Saudi Arabia have been unable to supply customers in full since the end of February.

The crisis for OPEC+ deepened when the United Arab Emirates left the Organization of the Petroleum Exporting Countries after almost 60 years.

Seven core members of OPEC+, which groups OPEC and allied producers including Russia, have increased their output quotas from April to June by almost 600,000 barrels per day.

In reality, the group's production has collapsed due to export cuts by Gulf members, averaging 33.19 million bpd in April versus 42.77 million in February, according to OPEC figures.

On Sunday, the seven members will likely increase targets by about 188,000 bpd from July.

This is the same as the June hike, which was adjusted down from monthly increases of 206,000 bpd in May and April to take into account the UAE exit.

The seven of 21 OPEC+ members due to meet on Sunday are Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia, and Oman.