Romania's foreign ministry called the drone incident a serious and irresponsible provocation by Russia.

Iran’s Islamic Revolutionary Guard Corps said it launched a large-scale missile and drone strike on a US base in Kuwait this morning in retaliation for an attack on Abbas Port and that such operations will continue as a new routine; Iranian state media also reported Iran’s air defenses shot down a US drone near Bushehr. The US military said it intercepted five Iranian drones and struck Iranian military sites; US Treasury Secretary Bessent said Washington will maintain maximum pressure on Iran and has warned firms and states not to pay any proposed passage fees. Washington has added Iran’s Persian Gulf Strait Authority to its sanctions list and placed the UN special rapporteur for the West Bank and Gaza under sanctions. Iran warned it controls and manages the Strait of Hormuz, said it will decisively respond to any interference, and reported warning shots at four vessels near the strait; Gulf states condemned the Kuwait attack, with the UAE explicitly blaming Iran. Israel ordered the military to occupy 70% of Gaza and carried out strikes in Beirut reportedly aimed at Iranian militia commanders; the IDF detained five militants in Judea and Samaria. On negotiations, Iran says frozen assets must be released unconditionally; US and Iranian officials reportedly agreed on a memorandum of understanding that still requires final approval, while Tehran’s leadership has not formally endorsed any deal and Iran’s deputy foreign minister said it will not sign agreements contrary to national interests.

The ECB said in a blog a war involving Iran could push euro-area consumers' medium-term inflation expectations higher, strengthening the case for further rate hikes. It noted the 2022 Russia-Ukraine invasion and earlier geopolitical tensions left a "double hit" that has raised the probability households expect faster future price rises; policymakers are concerned energy-cost shocks could feed through into wages and corporate pricing. Short-term inflation expectations have risen markedly while medium-to-longer-term expectations have changed little. Markets largely price a 25bp ECB hike in two weeks; euro-area inflation is 3% and likely to pick up, and the ECB flagged the risk that short-term expectations may be extended into the medium term, creating upside risk to medium-term expectations.