Israel rejects US Gaza plan as Hamas accepts terms

Israeli officials said Prime Minister Benjamin Netanyahu has rejected a US-backed plan for Gaza that Hamas had accepted, setting a condition that Israel’s military would make “no withdrawal until Hamas is truly disarmed.” Officials described the stance as delivered at a cabinet meeting, and said a broader public reaction was still pending.

The position leaves the proposal without Israeli cabinet backing on the terms described, keeping the war at the center of regional risk calculations. The most immediate channel for markets, as laid out by officials, is geopolitics: any setback to a truce can feed risk premiums in energy, regional assets, and safe-haven flows if investors judge escalation risks to be rising.

Netanyahu ties withdrawal to Hamas disarmament

Officials said Netanyahu’s message was explicit on sequencing: Israeli forces would not pull back unless Hamas is “truly disarmed.” That linkage, as presented, creates a structural hurdle because Hamas accepting a plan does not produce a ceasefire if Israel requires disarmament first.

As a result, the durability of the US-backed proposal now depends on whether mediators can bridge the “order-of-operations” dispute. Under the terms described by officials, Israel’s condition functions as a precondition rather than a reciprocal step.

Mediation hinges on verification and enforcement

If Israel maintains the position of no withdrawal before disarmament, officials said discussions are likely to concentrate on verification and enforcement. That includes questions over how weapons handovers would be monitored and which party or mechanism would be responsible for oversight.

Officials said an alternative would be a phased framework, where mediators secure language that shifts the mechanism toward reciprocal steps rather than a single precondition. In that scenario, the central issue would be sequencing formulae rather than an all-at-once threshold.

Market and political sensitivity remains high

For global markets, the macro impact described runs mainly through oil risk premiums and defensive positioning rather than a direct growth shock. Officials framed the risk as headline-driven, with price sensitivity linked to whether investors see escalation risks increasing.

For Israel, officials said the decision preserves military flexibility while increasing diplomatic friction with Washington. For the wider region, they said it maintains pressure on ceasefire diplomacy and leaves shipping, energy, and regional security assets exposed to headline risk.

Officials said a key near-term marker will be whether US mediators announce a revised sequencing formula by August 11, 2026, or whether Israeli and Hamas positions remain too far apart for the plan to move forward.