(Bloomberg) -- Israeli forces engaged in heavy fighting with Hamas in the northern Gaza Strip overnight as the US said it was optimistic about a deal to free hostages held by the militant group.
Most Read from Bloomberg
The Israeli military and Shin Bet, the country’s domestic security service, said they killed three Hamas commanders, while fighter jets bombed more buildings and sites used by the Iran-backed organization.
The main thrust of Israel’s ground offensive is eastwards into Gaza City, which the military describes as Hamas’s “center of gravity.” Israeli forces have taken control of many parts of the city’s Al Shifa hospital and over the weekend showed videos they say prove Hamas exploited the facility, building a command center and tunnels underneath it.
Hamas, designated a terrorist group by the US and European Union, used Al Shifa “to carry out gruesome terrorist activity,” Israeli military spokesman Amnon Shefler said in a briefing on Sunday night. “They have it as a command center, as a control center, as a place to hide hostages, as a place to murder and kill.”
The movement of troops into the Shifa complex last week was controversial, with the US urging Israel to exercise restraint and prioritize the safety of the patients still there as well as civilians taking shelter.
President Joe Biden on Monday said that Israel and Hamas were closing in on an agreement to release a group of hostages. “I believe so,” he said when asked if a deal was near, adding he wasn’t prepared to give details.
US Deputy National Security Advisor Jon Finer said in an interview Sunday with NBC that the parties were “closer than we have been in quite some time, maybe closer than we have been since the beginning of this process, to getting this deal done.”
Yahya Sinwar, Hamas’s leader in Gaza, is engaged in the talks and has agreed in principle for more than 50 women and children to be released, Axios reported. In return, Israel would pause its military attacks for a specified time each day and release some Palestinians in Israeli jails.
Qatar, which hosts some of Hamas’s political leaders, is helping broker the talks.
While Israel has concentrated its airstrikes and ground assault on northern Gaza, it is now turning its attention to the south, signaling the possibility of sending troops there.
In recent days, it’s dropped leaflets on Khan Younis, telling residents to leave the southern city. Prime Minister Benjamin Netanyahu, on Saturday evening, said “all Hamas leaders are dead men walking” and wouldn’t rule out ground attacks in the area.
“We’re approaching the end of our campaign in northern Gaza to root out Hamas infrastructure and will turn to the rest of the Gaza Strip,” Israeli government spokesman Eylon Levy told Bloomberg Radio on Monday.
Israel has urged civilians to evacuate to southern Gaza since the beginning of the war.
The conflict erupted on Oct. 7 when Hamas militants swarmed southern Israel from Gaza, killing around 1,200 people and taking 240 hostage. Israel’s retaliatory attacks have led to more than 13,000 deaths, according to the Hamas-run Health Ministry in the Palestinian enclave.
The United Nations says the humanitarian situation in the densely packed Gaza Strip is dire and that its roughly 2 million inhabitants need much more food and medicine. Israel, which has put the territory under an almost-total blockade, has allowed more aid in from Egypt in recent weeks. The UN says the quantities are nowhere near enough.
While Gaza Burns, West Bank Is at a Boiling Point: Ruth Pollard
On Monday, an Arab delegation headed by Saudi Arabia’s top diplomat visited China and met Foreign Minister Wang Yi. They called for de-escalation in Gaza to end the “catastrophe” there.
The Israeli government distanced itself from a proposal by Intelligence Minister Gila Gamliel for a “voluntary resettlement” of Gazans to other countries at the conclusion of the war. That does not represent the official position of the Israeli government, and Gamliel is not a member of the war cabinet making decisions on the future of Gaza, an Israel official said to Bloomberg.
Egypt, Jordan and other Arab states have consistently rejected the idea of moving Palestinians out of Gaza, while the US has said there must not be any “forcible displacement.”
The risks of the war turning into a wider Middle East conflict were again underscored on Sunday when Iran-backed Houthi rebels in Yemen seized a cargo ship in the Red Sea that’s owned by an Israeli businessman.
European natural gas futures increased as much as 6.9% on Monday, largely on renewed concerns the war could affect vital waterways for energy and freight markets.
Tokyo-based Nippon Yusen KK said the Galaxy Leader, a vehicle carrier that it chartered, was taken in the southern part of the Red Sea. The Houthis said it was diverted to the Yemeni coast and warned they may attack more Israel-linked vessels.
--With assistance from Gwen Ackerman, Sam Dagher, Rachael Dottle, Sylvia Westall, Jordan Fabian, Jennifer Jacobs and Stephanie Lai.
(Updates with Israeli official’s comments, in 14th paragraph)
Most Read from Bloomberg Businessweek
©2023 Bloomberg L.P.