BBC News, the Guardian, Times, Financial Times and Reuters report that US President Donald Trump has said that the US Navy has destroyed an Iranian drone in the Strait of Hormuz. Trump said the USS Boxer amphibious assault ship “took defensive action” on Thursday after the drone came within about 1,000 yards (914m) of the vessel. Iran has denied the claims. Deputy Foreign Minister Abbas Araqchi tweeted: “We have not lost any drone in the Strait of Hormuz nor anywhere else. I am worried that USS Boxer has shot down their own UAS [unmanned aerial system] by mistake!” BBC News, the Guardian, Telegraph, Independent and Financial Times earlier reported that Iran said it had seized a “foreign tanker” on Sunday for smuggling fuel in the Gulf during naval patrols aimed at “discovering and confronting organised smuggling”. The incidents have amplified fears of military conflict, with Reuters reporting that Oil prices rose on Friday: “the longer-term outlook for oil has grown increasingly bearish”.

The Guardian and Reuters report that Iran has offered the US a deal in which it would formally and permanently accept enhanced inspections of its nuclear programme in return for the permanent lifting of US sanctions. Though, it is unlikely to be warmly received by the Trump administration, which is currently demanding Iran make a range of concessions, including cessation of uranium enrichment and support for its regional proxies. Foreign Minister Mohammad Javad Zarif insisted that his offer was “a substantial move”: “It’s not about photo ops. We are interested in substance,” he told reporters at the Iranian mission to the UN in New York on Thursday. “There are other substantial moves that can be made.”

The Financial Times reports that US Treasury Secretary Steven Mnuchin has reaffirmed the Trump administration’s determination to enforce US sanctions against Iran and to exclude those who disobey from the dollar system. “If you want to participate in the dollar system you abide by US sanctions,” Mnuchin said after discussing Iran and other issues with his French counterpart Bruno Le Maire on the side-lines of a G7 financial meeting in France. The threat came as Russia signalled its willingness to join Instex and called on Brussels to expand the new mechanism to cover oil exports. Reuters reports that the US has imposed sanctions on an international network of companies and their agents it said were involved in the procurement of materials for Iran’s nuclear programme. They are the first punitive steps by Washington since Tehran announced earlier this month it would increase its enriched uranium levels. “Treasury is taking action to shut down an Iranian nuclear procurement network that leverages Chinese- and Belgium-based front companies to acquire critical nuclear materials and benefit the regime’s malign ambitions,” Treasury Secretary Steven Mnuchin said.

Reuters reports that the US is struggling to win support for an initiative to heighten surveillance of Middle East oil shipping lanes. On 9 July, Washington proposed stepping up efforts to safeguard strategic waters where it blames Iran and its proxies for tanker attacks. A senior Pentagon official has said that the US aim was not to set up a military coalition but to shine a “flashlight” in the region to deter attacks on commercial shipping. “The Americans want to create an ‘alliance of the willing’ who confront future attacks,” a Western diplomat said. “Nobody wants to be on that confrontational course and part of a U.S. push against Iran.”

The Independent reports that the US is preparing to send up to 500 troops to the Prince Sultan Airbase in Saudi Arabia where satellite images appear to show a build-up of US forces. Preparations are also reportedly underway for a large missile installation from which Patriot surface-to-air missiles can be launched to protect the base from incoming threats. The move comes amid rising tensions with Iran.

BBC News reports that Argentina has designated Lebanon’s Hezbollah movement as a terrorist organisation and frozen its assets. It accuses the Shia Islamist group of orchestrating two attacks on Argentinian soil. The announcement was made on the 25^th anniversary of the bombing of the Amia Jewish cultural centre in Buenos Aires. Hezbollah is designated as a terrorist organisation by the US, UK, Israel and several Gulf Arab states. “At present, Hezbollah continues to represent a current threat to security and the integrity of the economic and financial order of the Argentine Republic,” Argentina’s Financial Information Unit said on Thursday in a statement announcing the freezing of the group’s assets.

The Times reports that senior US sources have stated that an unprecedented breach between the US and Turkey over its purchase of the Russian S-400 system has caused the ‘biggest crisis in NATO for decades’. Relations between the two NATO members deteriorated further following the official cancellation of Turkey’s purchase of F-35 fighter jets by the Trump administration. The action was in retaliation for President Erdogan’s decision to buy Russia’s S-400 anti-aircraft system. “The US is right in cancelling the sale of F-35s to Turkey but this poses a real problem for NATO,” General Jack Keane, former vice-chief of staff of the US army. “Purchasing the S-400 system literally flies in the face of Nato policy against acquiring Russian military systems and is unacceptable. We’ve not had tension like this between Nato countries for decades,” he said. However, he emphasised the continuing value of Turkey to NATO as “the pathway to the Middle East and Asia and the most strategically located country in the alliance”. The Independent reports that Turkey said it was considering “alternatives” to US fighter jets including Moscow’s Sukhoi Su-35 – a next-generation successor to the Su-24 jet fighter Turkey shot down three years ago.

Reuters reports that Israeli plans to demolish Palestinian homes near a military barrier on the outskirts of Jerusalem have drawn international criticism. The deadline for residents of Sur Baher to remove the buildings expired on Friday after Israel’s Supreme Court ruled in June that the structures in question violated a construction ban. Sur Baher is a Palestinian community that lies southeast of Jerusalem’s city centre in an area that Israel captured and occupied in the 1967 Middle East War.

BBC News reports that Twelve Israeli teenagers have appeared in court in Cyprus over the alleged rape of a 19-year-old British woman. The alleged attack was said to have taken place in a hotel in the popular holiday resort of Ayia Napa. The men, aged between 15 and 18 – have not entered their pleas. They have been remanded in custody and police have been given a further eight days to investigate. The British woman contacted police in the early hours of Wednesday morning saying she had been raped in a hotel in Ayia Napa.

BBC News reports that Israeli archaeologists have discovered one of the world’s earliest known mosques in Israel’s Negev Desert. The remains, dating from the 7^th or 8^th century, were found in the Bedouin town of Rahat. Israel’s Antiquities Authority (IAA) says the mosque was unearthed during building work in the area. It is the first known mosque from this period in the area, rivalling the age of those found in Mecca and Jerusalem, the IAA said. Excavation directors Jon Seligman and Shahar Zur said the mosque would be “a rare discovery anywhere in the world”.

Reuters reports that the US has imposed sanctions on two Iraqi militia leaders and two former Iraqi provincial governors it accused of human rights abuses and corruption. The sanctions target militia leaders Rayan al-Kildani and Waad Qado, and former governors Nawfal Hammadi al-Sultan and Ahmed al-Jubouri, the US Treasury said in a statement.

In the Financial Times, Laura Pitel and Henry Foy argue that Turkey’s purchase of the Russian S-400 defence system points to ‘tectonic shift’ in geopolitics: “The purchase raises bigger questions about the future of Turkey’s role in NATO. It has insisted that it wants to remain an active member of the alliance. Yet US officials worry about their future ability to collaborate when the country has been sidelined from the F-35 fighter jet programme, which they hope will become the backbone of Nato air operations”.

In the Telegraph, Adrian Blomfield examines the strategic significance of the Strait of Hormuz, “the world’s most important chokepoint”. Blomfield writes that “deprived of its main income generator, Iran’s regime may conclude that self-preservation can only be achieved through the most drastic response left in its armoury”.

In the Financial Times, Ilan Ben Zion argues that the the shooting of an 18-year-old Ethiopian Israeli by an off-duty office puts the spotlight on discrimination beyond the Arab community in Israel.

In the Israeli media Yediot Ahronot, Maariv and Haaretz report that Gesher leader Orly Levy-Abekasis has agreed to merge with Labour. Labour leader Amir Peretz said: “I am standing with excitement and great pride next to Orly Levy-Abekasis, a trailblazer who has a broad worldview of social justice and not of charity, of state responsibility for the fate of the elderly, the disabled, young couples, urban and rural residents, the residents of the periphery and the kibbutzim and moshavim, from the citizens of the Galilee panhandle and Kiryat Shmona to the residents of the Gaza periphery communities and Sderot. I’ve been repeatedly impressed as I saw Orly topple walls of resistance, pass socially-minded bills and prevent economic austerity measures.” Levy-Abekasis said: “Hand-in-hand, we will deliver real social change. Not right or left, but real people. The time has come for us to rally in favour of what is good for the country. I call on [other] people to join the merger between me and Amir, between Gesher and Labor, because that is the real connection.”

Levy-Abekasis will take the second slot of the joint party list after Peretz. Gesher representatives are expected to receive another one or two reserved slots in the top ten places on the list, and another reserved slot in the following ten places. Peretz and Levy-Abekasis are expected to decide on a new name for the joint list.

Yediot Ahronot reports that Blue and White leader Benny Gantz, who tried to bring Levy-Abekasis into Blue and White in the previous elections, welcomed the merger: “Orly is a social leader, and it’s good for the State of Israel to have her in the Knesset.” Meretz party sources indicated that there will not now be a merger between Labour and Meretz. The paper reports that Peretz has met with a number of potential recruits including Tzipi Livni and the former GSS director, Yuval Diskin but Livni is not expected to join any political party.

Yediot Ahronot reports that intensive talks have been held in the last few days between Ayelet Shaked and Naftali Bennett, who headed the New Right in the last elections, and United Right leader Rabbi Rafi Peretz and his aides. With only 60 days to go until the elections, the bone of contention remains the question of who will head a united right wing list. Sources said that even though Peretz has seen polls that show Ayelet Shaked would win the party more seats as the party leader than he would, he refuses give up first place. Senior political sources say that aside from Peretz, everyone else in the right wing parties would prefer to see Shaked lead a merged list because she is projected to win more seats. Prime Minister Netanyahu is likely to be very involved, as he wants to ensure that just one large right wing party runs in the elections to the right of the Likud, or two at most. One question that is still unanswered is what will Netanyahu do if no agreement is ultimately reached with Ayelet Shaked. While Netanyahu’s associates have repeatedly said that Netanyahu does not want to reserve Shaked a slot on the Likud list, that might nevertheless happen.

Maariv reports the results of a poll it commissioned (before the news of Gesher and Labour’s merger) that found that if the Labour Party were to merge with Meretz, it would win 13 seats and Ehud Barak’s new party four seats. The total number of seats won by those parties (17 seats) is greater than in the scenario in which each party were to run separately. But the poll indicates that the gains made by those three parties would be at the expense of Blue and White.

Yossi Verter in Haaretz writes that: “There’s no knowing what the next eight weeks will bring, but one thing that’s clear is that Lieberman is stable and solid, and it is quite likely that Balfour Street’s nightmare vision will be realised following the election, with Yisrael Beiteinu and its leader being the deciding factor in the formation of the next coalition. His campaign is simple and effective: Yes to a Jewish state, no to a state of halakha (traditional Jewish law). Rafi Peretz and Bezalel Smotrich, the leaders of the Union Right, have – unintentionally – become Lieberman’s main campaign assets, and are worth their weight in gold.” He adds that: “Internal polls… showed Likud winning 33 seats, tops. The coveted “bloc” isn’t rising to the lucky number, the wellspring of life: 61. The coffers, alas, are full of holes and running low. Moshe Kahlon’s Kulanu party is out of the equation. Its four seats have scattered every which way, and not a shred of them remains in Likud. Lieberman, as we have seen, is on the rise. The Union Right teeters on the edge of the electoral threshold (which requires 3.25 percent of the valid votes cast, meaning four seats). And “Rabbi Rafi” Peretz has succeeded in scaring off secular right-wing voters as well as moderate, enlightened, respectable Orthodox voters, who are disgusted by him and by Smotrich.”