Israel’s Netanyahu Agrees To Lebanon Talks As Markets Rally On De-Escalation Hopes

by Stefan J. Bos, Worthy News Chief International Correspondent

JERUSALEM/BEIRUT/WASHINGTON (Worthy News) – Israeli Prime Minister Benjamin Netanyahu said Thursday he has agreed for Israel to begin peace talks with Lebanon, raising hopes of regional de-escalation and triggering a rally in global stock markets alongside falling oil prices.

“In light of Lebanon’s repeated requests to open direct negotiations with Israel, I instructed the cabinet yesterday to start direct negotiations with Lebanon as soon as possible,” Netanyahu said in a statement.

“The negotiations will focus on disarming Hezbollah and establishing peaceful relations between Israel and Lebanon,” he added, referring to the Iran-backed militant group.

There was no immediate response from the Lebanese government to Netanyahu’s remarks, though earlier Thursday Lebanese President Joseph Aoun signaled openness to such a move.

He said “the only solution to the situation in Lebanon is to achieve a ceasefire between Israel and Lebanon, followed by direct negotiations between them,” adding that diplomatic efforts were beginning to gain traction among international actors.

The developments suggest a potential shift toward direct engagement between the two countries, which have no formal diplomatic relations and have historically relied on indirect, mediated contacts.

ESCALATION AND HUMAN COST

Israel launched a renewed offensive against Hezbollah after the Iran-backed group began firing rockets and drones at Israel on March 2.

Lebanese authorities say Israeli strikes have killed around 1,700 people and displaced more than one million others, though such figures could not be independently verified.

Sources familiar with Hezbollah said at least 400 of its fighters have been killed in the fighting, while the group has fired hundreds of rockets and drones into Israeli territory.

Financial markets reacted swiftly to signs of possible de-escalation.

The S&P 500 rose for a seventh straight session, marking its longest advance since October, while oil prices eased as concerns over prolonged disruption in the Strait of Hormuz diminished.

U.S. crude hovered near $98 per barrel amid expectations that tensions in the region could ease, improving prospects for energy flows through the vital shipping route, through which roughly one-fifth of the world’s oil supply passes.

BROADER NEGOTIATIONS

The developments came as the United States and Iran prepared for peace talks in Pakistan following a reported two-week ceasefire agreement, though key issues remain unresolved, including Israel’s offensive in Lebanon and the reopening of the Strait of Hormuz.

U.S. President Donald J. Trump has reportedly urged Netanyahu to scale back military operations to support broader diplomatic efforts, according to U.S. media.

“Not much matters for the market other than the durability of the ceasefire, shipping volume through the Strait of Hormuz and ultimately whether a bona fide permanent deal is struck,” said Bradford Smith of Janus Henderson Investors, the global investment management company.

The market optimism came despite signs of slowing growth in the U.S. economy, with recent data showing weaker-than-expected expansion in late 2025 and only modest gains in consumer spending earlier this year.

Despite the diplomatic signals, it remained unclear when or where any direct talks between Israel and Lebanon might begin, or whether key actors including Hezbollah would participate or accept such negotiations.

Analysts cautioned that while markets welcomed the announcement, the situation on the ground remained volatile and highly uncertain.

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