Israel launches ground invasion of Gaza City

Nearly two years into its retaliatory military offensive in the Gaza Strip, Israel said it has launched a long-studied ground assault on Gaza City.

“IDF troops have begun expanding ground operations in Gaza City as part of Operation Gideon’s Chariots II,” the Israeli Defense Forces said Tuesday on social media.

“Gaza is burning,” Israeli Defense Minister Israel Katz had said earlier in the day, in a separate Google-translated update. “We will not relent or turn back — until the mission is complete,” he added.

The ground invasion marks a deepening of Israel’s offensive in the Gaza Strip, which once housed 2.2 million people and has devolved into a starvation-stricken battlefield. Gaza City, previously the enclave’s most populous urban settlement, is still home to hundreds of thousands of displaced Palestinian people.

Israel insists its campaign targets the demilitarization of Hamas and release of hostages taken by the Palestinian militant group after its terror attacks in October 2023. 

Speaking to reporters as he prepared to leave Israel, visiting U.S. Secretary of State Marco Rubio signaled that a ground invasion of Gaza City was imminent.

“Well, as you saw, the Israelis have begun to take operations there. So we think we have a very short window of time in which a deal could happen. We don’t have months anymore,” he said. “Our preference, our number one choice, is that this ends with a negotiated settlement with Hamas.”

CNBC has reached out to the IDF and Israeli Ministry of Foreign Affairs for comment.

Israel’s military progress in Gaza has increasingly isolated the Jewish state on the international stage.

Several Western nations initially backed Israel’s right to self-defense and to pursue Hamas militarily after the Palestinian militant group’s terror attacks, but have since noted the perceived disproportionality of the Jewish state’s Gaza campaign and risk to civilians.

Nations including Norway, Spain and Ireland recognized Palestinian statehood in the spring of 2024, with France, Canada and Australia later announcing plans to take the same step this month. In a blow to Israeli Prime Minister Benjamin Netanyahu’s administration, a report by the U.N. Commission of Inquiry on Tuesday concluded that Israel has committed genocide against Palestinian people in the Gaza enclave.

The U.N.-commissioned report does not officially speak for the U.N., which has not yet used the term “genocide.”

In November 2024, the International Criminal Court issued arrest warrants for Netanyahu, his former defense minister and Hamas officials on charges of war crimes and crimes against humanity over the Gaza conflict and October 2023 terror onslaught.

The U.N. commission’s Tuesday findings could deal a further reputational blow to Israel, which has sought to retain working trade ties with international partners. In August, the world’s largest sovereign wealth fund, Norges Bank Investment Management, said it had quit its investments in U.S. machinery manufacturer Caterpillar and five Israeli banks following a review of the companies’ connection to the Gaza conflict. Germany has meanwhile halted the export of weapons to Israel for in the Gaza Strip.

Broader market reactions have been muted, barring brief spikes in oil prices when Israel entered direct confrontations with Hamas’ crude-rich patron Iran and with other of Tehran’s proxies, such as Lebanese militant group Hezbollah and Yemen’s Houthis.

Yet Arab nations in the oil-bountiful Middle East — many of which entertain or are building solid relations with the U.S. — are unlikely to protest Israel’s current aggression in Gaza through an oil embargo, as they did in 1973, according to experts.  

“We would have to really see the big oil producers of the region — Saudi Arabia, the UAE, Iraq, Iran — join and create an oil embargo,” Marko Papic, macro and geopolitical expert at BCA Research, told CNBC’s Dan Murphy. “There is absolutely no talk of that, and therefore I believe this will continue to be completely and utterly market irrelevant for global investors.”

He also downplayed the odds of success of Israel’s latest Gaza offensive, which he qualified as “yet another incursion that is unlikely to root out Hamas, and the reason for that is that Hamas is an ideology that will persist, either in its current form or in some future form.”

Despite this, Israel’s invasion threatens to rupture the Jewish state’s already shaky political relations with its Arab neighbors, many of which have historically supported the Palestinian cause. The Gaza City invasion comes after Arab and Muslim leaders convened in Qatar and called for a review of ties with Israel following the country’s strike on Doha last week.

Qatar’s emir urged leaders to take “concrete steps” against Israel in response to a missile strike on Doha which killed six people, including a Qatari national. Israel said the strike was aimed at Hamas’ political leadership, who were, at the time, discussing Washington’s latest ceasefire proposal. Doha has long acted as a mediator between Israel and Hamas, hosting the political office of the group for many years.

Views on Israel are divided among other Gulf nations. The UAE signed the Abraham Accords in 2020, recognizing Israel and establishing diplomatic normalization along with Bahrain, Sudan and Morocco after years of Arab isolation. The agreement now faces “the most difficult time since it was signed five years ago,” Emirati academic and political scientist Abdulkhaleq Abdulla told CNBC.

U.S. President Donald Trump, meanwhile, has made it his mission to improve ties between Israel and other Arab nations, cementing Washington’s influence in the Middle East.

Saudi Arabia is Trump’s next big hope for normalization of relations with Israel, but that could now be out of reach. Crown Prince Mohammed bin Salman has signaled that this step would require a credible and irreversible pathway to the establishment of a Palestinian state.

For both the UAE and Saudi Arabia, the issues of ongoing deaths in Gaza and the potential Israeli annexation of the West Bank could imperil Trump’s ambitions to expand the Abraham Accords during his second term.

“While relations can keep on being resilient, they are taking a different nature – limited in scope, mostly under-the-radar, focusing on security interests, and without a meaningful public dimension,” Nimrod Goren, president and founder of Mitvim, told CNBC.

“Should the Israeli government decide to annex any part of Palestinian territories in the West Bank, following upcoming recognitions of a Palestinian state, then ties with Arab countries will suffer another blow and will further deteriorate. Israel should refrain from such a step, and the US should stop any such intentions,” he added.