Vowing retribution but urged to show restraint, Israel has yet to agree on its response to an expansive drone and missile strike carried out on its territories by Iran on Saturday.

A Monday meeting of Israel’s five-person war Cabinet, headed by Prime Minister Benjamin Netanyahu, concluded without comment on whether the Jewish state will honor its pledge to “exact a price” from Tehran or concede to calls for a measured response from international leaders.

The prolonged deliberation came after the Israeli military said that Iran on Saturday fired more than 300 drones and missiles at its soil. It claimed that it and international allies eliminated 99% of these attacks as part of its now-dubbed “Iron Shield” operation.

The U.S., U.K., France and Jordan assisted in intercepting these threats. Tehran said its assault was in response to an Israeli strike that killed several top commanders at an Iranian consulate in Damascus, Syria, on April 1 — an offensive for which Israel has yet to claim responsibility.

Iran said the Saturday hostilities have “concluded” its retaliation — and Israel is now left to consider next steps.

The Israeli war Cabinet is set to meet again Tuesday, according to Reuters. The prime minister’s office and Foreign Ministry did not immediately respond to a CNBC request for comment.

Speaking after the Cabinet’s Monday gathering, an Israeli official said that the country’s decision-makers believe it is important for any potential response to closely follow the attack, and that such a gesture would be coordinated with Washington, NBC News reports.

Concerns are mounting that the conflict — rooted in the Oct. 7 terror attack undertaken by Palestinian militant group Hamas and Israel’s retaliatory war campaign in the Gaza Strip — will seep into the broader Middle East region. Since October, Israel has traded fire with a spate of other Iran-supported factions, such as Lebanon’s Hezbollah, Yemeni Houthis and Bashar Assad’s Syrian administration.

Global markets have also been rattled by the hostilities. Oil prices have been bolstered by the potential for disruptions from heavyweight crude producer Iran, and international maritime trade has faced delays and suspensions amid Houthi attacks in the Red Sea.

“There are those in the war Cabinet now who will be pushing for a wider campaign in Lebanon against Hezbollah, against Iran itself to take advantage of this moment,” Julien Barnes-Dacey, director of the Middle East and North Africa program at the European Council on Foreign Relations, said Tuesday on CNBC’s “Street Signs Europe.”

Netanyahu, who has previously battled fraud and corruption charges and civil protests over his proposed judicial reforms, faces domestic pressure to assume a hard line against Iran – and international ones to stand down.

In a Google-translated social media post, Israel’s foreign minister, Israel Katz, said he is mobilizing a “diplomatic offensive” against Iran, noting that he has sent 32 world figures a letter “calling for calling for sanctions to be imposed on the Iranian missile project and that the Islamic Revolutionary Guard Corps be declared a terrorist organization.”

The Israeli military has also signaled its readiness to respond: “Iran will face the consequences for its actions. We will choose our response accordingly,” IDF Chief of General Staff Herzi Halevi said Monday night in a video address.

Yet U.S. officials say a potential Israeli retaliation could be restricted in scope to strikes against Iranian military forces and Iranian-backed proxies outside of Iranian territory, four U.S. officials told NBC News, with three sources adding that Washington does not intend to participate in such an offensive.

CNBC could not independently verify these reports.

“All that is left of “Mr. Security” is a village of ruins from Bari to Kiryat Shmona, and a complete loss of Israeli deterrence,” Israeli opposition leader Yair Lapid said of Netanyahu on social media, according to a Google translation. “It’s election time, now.”

But Ehud Olmert, former Israeli prime minister, told CNBC’s Dan Murphy that the absence of casualties and limited damage resulting from the Saturday attack means Israel may now “act in a quieter and more restrained and more reserved manner to somehow bring to a halt a direct confrontation with Iran.”

He acknowledged that Netanyahu is under strain from right-wing groups within the cabinet that are demanding a very “tough and painful reprisal” against Israel, but stressed “it’d be a mistake to attack Iran now. We defeated Iran on Saturday night.”

He added, “[U.S. President Joe] Biden wants to contain the situation, not to allow it to expand, and we all are in the same page with President Biden.”

The U.S. leader, who previously vowed “ironclad” commitment to Israel, has told Netanyahu that the White House would not join offensive operations against Iran, a senior administration official told NBC News.

World leaders across Europe, Asia-Pacific and the Middle East have widely called for calm, with Saudi Arabia — a now reconciled former foe of Iran — urging “the utmost levels of restraint.”

Iran rained a deluge of drones and missiles on Israel on Saturday night in response to a suspected Israeli strike that killed top Iranian officials in Syria, in a deep escalation of Middle East tensions.

Israel said it identified 300 “threats of various types” and eliminated “99%” of those bound for Israeli soil, according to an update from an Israel Defense Forces spokesperson, Rear Admiral Daniel Hagari. He said a 10-year-old girl was “severely injured by shrapnel” but reported no additional casualties, adding that “several launches” were also made toward Israel from Iraq, Yemen and Lebanon.  

Last night marked the first instance of a direct attack on Israel from Iranian territory. Iran-backed factions – such as Palestinian militant group Hamas, Lebanon’s Hezbollah, Yemeni Houthi and Bashar al-Assad’s Syrian administration – have engaged militarily with the Jewish state.  

Earlier on Saturday, Iran’s Revolutionary Guards had seized a cargo ship in the Strait of Hormuz, claiming a connection to Israel.

Iran’s chief of staff of the armed forces, Major General Mohammad Bagheri, said that Tehran’s operation had now concluded and would involve no further actions, in comments carried by Iran’s state-owned Islamic Republic News Agency.

“At this juncture, the Islamic Republic of Iran has no intention of continuing defensive operations, but if necessary, it will not hesitate to protect its legitimate interests against any new aggression,” Iran’s Foreign Minister Hossein Amir-Abdollahian said on social media on Sunday, according to a Google translation.

Israel and Iran have been on the cusp of direct conflict since the start of Israel’s military campaign in the Gaza Strip, which came in response to Hamas’ terror attack of Oct. 7. Iran vowed revenge after a suspected Israeli strike on an Iranian consulate in Damascus, Syria, on April 1, which killed several top Iranian military commanders.

“We will not be able to comment on the claims regarding a strike in Damascus,” an Israeli foreign ministry spokesperson told CNBC by email, adding, “Iran’s attack on Israel on the night of April 14th is a direct attack on a sovereign nation, its use of proxies for the last decades and the destabilizing effect of the Ayatollah regime in the region and beyond must end.”

Israel’s Ambassador to the U.N., Gilad Erdan, has also called an emergency meeting of the U.N. Security Council and “demanded that they condemn Iran’s attack on Israel and designate the Iranian Revolutionary Guard Corps as a terror organization.”

The European Union has blasted Tehran’s offensive: “The EU strongly condemns the unacceptable Iranian attack against Israel,” EU High Representative Josep Borrell said late Saturday on social media. “This is an unprecedented escalation and a grave threat to regional security.”

U.S. President Joe Biden also denounced the Iranian strike on Saturday as “unprecedented” and asked to convene G7 leaders to “coordinate a united diplomatic response to Iran’s brazen attack,” according to a White House statement.  

“While we have not seen attacks on our forces or facilities today, we will remain vigilant to all threats and will not hesitate to take all necessary action to protect our people,” he added.

Relations between stalwart allies Washington and Israel had appeared to slightly chill in recent weeks, with Biden warning further support would hinge on Israel taking steps to protect civilians and humanitarian aid workers in the Gaza enclave.

But the U.S. – alongside the U.K. and France, according to Israeli military – intervened to mitigate last night’s Iranian attack and the assault could reignite urgency to pass a key $95 billion bill including funding for Israel and Ukraine, which has passed the Senate but stagnated on Republican opposition in the U.S. House of Representatives.

“In light of Iran’s unjustified attack on Israel, the House will move from its previously announced legislative schedule next week to instead consider legislation that supports our ally Israel and holds Iran and its terrorist proxies accountable,” said House leader Steve Scalise on social media.

“Congress must also do its part. The national security supplemental that has waited months for action will provide critical resources to Israel and our own military forces in the region,” Mitch McConnell, Senate Republican leader, said in a statement. “We cannot hope to deter conflict without demonstrating resolve and investing seriously in American strength.”

Oil futures prices are in focus after intermittently swelling in recent months on trade disruptions and delays caused by Red Sea maritime attacks from Yemen’s Houthi, who claim solidarity with the Palestinian people.

Iran is also home to vast oil resources, which it has been largely routing toward China since the U.S. reimposed sanctions during Donald Trump’s administration.

The Iranian currency fell to a record low of 705,000 rials / USD on the unofficial market around 10:30 a.m. local time on Sunday, according to data from foreign exchange monitoring site Bonbast.

The Tel Aviv Stock Exchange’s flagship index, the TA-35, was down 0.38% at 10:23 a.m. London time.

In aviation, several airlines grounded or diverted service through the Middle East, following the Iranian attack. Jordan, Iraq and Lebanon have reopened their airspaces after brief closures on Saturday in the wake of the offensive, Reuters reports.

— CNBC’s Emma Graham contributed to this report

Oil prices rose on Tuesday after Iran dispatched a warship to the Red Sea, as the situation remains tense in the critical waterway for global shipments that has seen vessels attacked by Yemen’s Houthi rebels.

Global crude benchmark Brent jumped 2.5% to $78.97 a barrel, while the U.S. West Texas Intermediate gained 2.5% to $73.43 per barrel during Asia trading hours. 

Iran on Monday announced it sent the Alborz destroyer through the strategic Bab al-Mandeb Strait, the country’s state media reported, without elaborating on details of the warship’s mission. It added that operations are periodically conducted in the Red Sea to secure shipping routes.

The move comes after the U.S. Navy destroyed three boats of Iran-backed Houthi rebels, killing 10 militants, according to an AP report. The Navy was responding to a distress call by Singapore-flagged vessel Maersk Hangzhou which had come under Houthi fire, the U.S. Central Command said in a statement.

In a statement by a rebel spokesman on Sunday, the Houthi group maintained that the boats were engaged in “official duties to secure maritime routes”, a news channel owned by the rebels stated. 

“Any escalation of conflict in this region is certainly going to add more of a risk premium on Brent,” Bernstein’s Senior Energy Analyst Neil Beveridge told CNBC. He noted, however, that there won’t be any major impact just yet.

“We haven’t seen the Iranian naval incursions before. And as long as it really doesn’t lead to any escalation, then I don’t really see any significant impact at this level,” he added.

The Houthi group has been attacking vessels in the Red Sea, targeting Israeli ships and other vessels headed to or from Israel, in retaliation for the country’s war in Gaza that has so far killed nearly 22,000 people there.

Major shipping companies stopped traversing the Suez Canal and Red Sea routes in early December, choosing to reroute via southern Africa instead — a longer and more expensive journey with ocean freight rates hitting as high as $10,000 per container. 

German container shipper Hapag-Lloyd said Friday it would continue to divert its vessels around the Suez Canal.

However, the launch of Operation Prosperity Guardian, a multinational maritime force, by the U.S, has bolstered the confidence of shipping companies. Danish shipping giant Maersk said Sunday it would resume operations in the Red Sea and the Gulf of Aden.

A hacking group widely reported as being linked to Israel has taken responsibility for a cyberattack that’s knocked out the majority of gas stations across Iran, leading to long lines of cars and angry crowds.

Iranian state TV cited the country’s Oil Minister Javad Owji saying that outside interference was a possible cause after 70% of Iran’s gas stations were hit by service disruptions, according to Reuters.

A group called Gonjeshke Darande, or Predatory Sparrow, claimed it was behind the attack in a post on the social media site X.

“We, Gonjeshke Darande, carried out another cyberattack today, taking out a majority of the gas pumps throughout Iran. This cyberattack comes in response to the aggression of the Islamic Republic and its proxies in the region,” the post read.

Addressing Iran’s leader Ayatollah Ali Khamenei, the group added: “Khamenei, playing with fire has a price.”

Gonjeshke Darande has claimed responsibility for previous cyberattacks on Iran, including one on Iran’s major steel companies.

Iran’s civil defense agency said an investigation was underway and that it was still examining all possible causes for the disruption. Israeli media has covered the alleged attack, but Israel’s government has not commented on it.

Some Western media outlets are facing backlash from Iranian activists over headlines printed Sunday saying that Iran was abolishing its “morality police.” 

The news – an interpretation of a comment by an Iranian official during a press conference – turned out to be anything but clear cut. The country’s state media has since denied it. Many Iranian anti-government activists now feat it will distract from three days of major strikes around the country. 

So what happened?

Iran’s Attorney General Mohammad Jafar Montazeri, when asked over the weekend about why the country’s “morality police,” or Gasht-e Irshad, had become inactive, replied: “The morality police had nothing to do with the judiciary, and the same institution that established it has now shut it down.”

He added that “the judiciary will continue to supervise social behaviors.”

The question reflected the experience of many Iranians who say they have not seen the morality police on the streets since anti-government protests across the country began in mid-September. They were triggered by the death of 22-year-old woman Mahsa Amini while in the custody of the morality police after she was arrested for allegedly wearing her headscarf improperly.

This branch of the police is responsible for enforcing Iran’s mandatory headscarf law and other strict measures that disproportionately affect women. 

But when several Western media outlets such as the Wall Street Journal and New York Times seized on the quote to run headlines saying that Iran’s morality police had been abolished, Iranian activists and country analysts responded with a torrent of criticism. The attorney general’s statement has no effect on actual policy, they said, and he has no authority over that particular branch of law enforcement. 

What’s more, the higher branches of Iran’s government have not confirmed it, and Iranian state media has denied any abolition of the morality police. 

“No official in the Islamic Republic of Iran has confirmed the closure of the Irshad Patrol,” an article from Iranian state-run Arabic language outlet Al Alam said Sunday evening.

It added that “the maximum impression that can be taken” from Montazeri’s comment is that the morality police and his branch of government, the judiciary, are unrelated. 

Many of the Iranian protesters and those supporting the demonstrations overseas fear the headlines are misleading and create a false impression that Iran’s hardline Islamic government is making genuine concessions to the protesters.  

Instead, the government has announced several more executions of people who took part in the protests. Rights groups say that more than 450 people have been killed in the state’s crackdowns so far, while Iranian officials say more than 300 have been killed in the unrest.

Several Iranian activists and researchers used the words “misleading,” “fake news” and “shame on you” in their social media posts criticizing certain major Western outlets for their headlines claiming the morality police had been abolished.

“So amazing how many news outlets are going with the ‘Iran abolishes morality police’ line based on a convoluted quote from one official,” Borzou Daragahi, the international correspondent for The Independent, wrote on Twitter. “In reality morality police have been inactive since protests started, but there is no substantive news on their future.” 

“Reports that Khamenei’s regime has abolished the ‘morality police’ are fake news,” Kasra Aarabi, the Iran Program lead at the Tony Blair Institute for Global Change, wrote in a Twitter post Sunday. “This disinfo was propagated today to distract media attention from the 3 days of major protests in Iran which begin tomo. Why did mainstream media ignore this context?”

Nicole Najafi, a writer and activist, wrote in an Instagram post: “The laws and punishments concerning women have not changed. Even if they did abolish the morality police, this is meaningless, because Iranians want the regime gone … it’s like Putin saying he offered a free dinner to Ukrainian soldiers as a peace offering. NO DICE.”  

Protests have rocked Iran for more than 70 days now in what has become the biggest challenge to the government in decades. Unlike previous protest movements in Iran directed against issues like elections, living standards or a specific law, the current demonstrations are directly demanding the removal of the Islamic Republic, which was installed as a theocratic government following Iran’s Islamic Revolution in 1979.

Iran’s protest movement on Monday started a concerted effort to hold three days of strikes, with reports of thousands of businesses closed in several parts of the country. Footage posted to social media shows rows of shuttered shops. Teachers, factory workers and students are staging strikes and sit-ins as well, according to London-based outlet Iran International. CNBC has not been able to independently confirm the footage. 

“Nationwide strikes, particularly in key sectors, could be used to put time on the side of protestors while creating chaos and financial issues for the state,” Behnam Ben Taleblu, an Iran expert and senior fellow at the Foundation for Defense of Democracies, told CNBC.  

Coordinated efforts for organized strikes are growing in Iran. Leaflets and graffiti are increasingly used to highlight important protest and strike days. 

If the attorney general’s comments convey one thing, Ben Taleblu said, it’s “the imperative of keeping up domestic and foreign pressure against the Islamic Republic. And nobody understands this better than the Iranian people, who have been bravely protesting for almost three months now and are looking to amplify street power with strike power.” 

The strikes are key for the protesters because any idea of real concessions from the government is likely a pipe dream, says Arash Azizi, an Iranian historian and analyst. 

“There have been signs that some in the regime are thinking of giving some concessions including relaxing hijab (headscarf) laws,” Azizi said. “This is not surprising given the unprecedented nature of the revolutionary movement in Iran.” 

“But,” he added, “these are unlikely to go far since the leader, (Ayatollah) Ali Khamenei, has long not been interested in concessions, and knows that significant concessions can do the opposite of defusing the movement; they can encourage it further.”