The Islamic Republic of Iran is reportedly offering to forgo retaliating for the killing of its terrorist master in return for a Gaza cease-fire — even as its top terrorist proxy, Hezbollah, is taunting a “humiliated” Israel and its capitulation to American pressure.

At the same time, Hezbollah’s chief, Hassan Nasrallah, on Monday is threatening that a major Iranian retaliation is coming. He referred to last week’s killing of several operatives of the Islamic Revolutionary Guards Corps, who were based at Damascus and were charged with coordinating the Iranian proxy armies’ war on Israel.

Fears that an Iranian revenge attack would prompt an all-out Mideast war may have been behind the renewed American pressure on Israel to wind down its Gaza operations. Yet, hesitancy to confront America and Israel could limit Iran’s military options.

The Islamic Republic’s “bark is worse than its bite,” the policy director of United Against Nuclear Iran, Jason Brodsky, tells the Sun. Any retaliation, if there is one at all, “won’t be this cataclysmic clash that people think it would be,” he adds. 

Meanwhile, Jerusalem officials are expressing cautious optimism over hostage negotiations following the Israel Defense Force’s withdrawal from Khan Yunis. While negotiations at Cairo center on even more Israeli concessions, Prime Minister Netanyahu vows nevertheless to complete Israel’s victory over Hamas. “A date is set” to enter Rafah and finish off the terrorist group’s remnants there, he said Monday. 

For now, Israeli officials are hinting heavily that Sunday’s withdrawal, leaving behind only a small number of IDF forces in the center of the Strip, could help negotiations at Cairo. “There will be hard decisions, but we are ready to pay a price to return the hostages,” the defense minister, Yoav Galant, said Monday. 

At Washington, the national security council’s spokesman, John Kirby, said Monday that nothing is more urgent than a deal on the hostages. Yet, the White House’s increased pressure on Israel might also have to do with fears of Iran’s threats of retaliation. 

Last Monday Israeli missiles struck a building adjacent to the Iranian embassy at Damascus, killing several IRGC operatives, including its Quds commander in the region, General Mohammad Reza Zahedi. Since then, Iran has publicly vowed a “painful” revenge.

Citing an Arab diplomat, the Arabic language news site Jadeh Iran is reporting Monday that late last week Tehran informed Washington that it would refrain from retaliating if America forces Israel into a Gaza cease-fire. “It will be a great success for the Biden administration, and we can build on that,” the site quotes a diplomat as saying. 

A widely followed anti-regime London-based website, Iran International, notes that the Jadeh Iran report is based on one source and that it seems to serve the Islamic Republic’s interests. Among those, according to the website, is an attempt to keep America at Iran’s side. 

Earlier, Washington reportedly sent messages to Tehran denying America was involved in the Damascus attack, and warning against targeting U.S. bases in the region. American forces, though, are on high alert, actively preparing for a “significant” Iranian attack targeting Israeli or American assets in the region, CNN reports. 

Fear of widened hostilities and an all-out regional war were discussed at length during President Biden’s contentious call with Mr. Netanyahu last week, according to multiple reports. In the phone conversation, the president threatened that American policies toward Israel could be altered unless changes are made in Gaza. Following the call, IDF forces left Khan Yunis. Only a small force remains in Gaza even as the air force continues to bombard Hamas targets. 

“Biden’s recent call with Netanyahu is evidence that the American can impose on Israel what he wants,” Mr. Nasrallah said in his Monday speech. Israel is “humiliated under fire,” he said, as it “left Gaza before the demand in the negotiations became binding.”  He then reiterated that an “Iranian response to the attack on the Iranian consulate is coming.” 

Tehran and its proxies may nevertheless forgo retaliation after all. “Iran already may have chosen to absorb the strike and respond later,” the Foundation for Defense of Democracies’ Iran watcher, Behnam Ben Taleblu, tells the Sun. “Nothing could offer Tehran a harder revenge than seeing the Jewish state fall short of achieving its war aims as a distance is growing between Washington and Jerusalem.”

The mullahs and their proxies are perhaps underestimating Israel’s determination to ensure, with or without America’s backing, that Hezbollah is weakened and Hamas loses its military capabilities and control in Gaza. Yet, the region-wide perception that Israel has capitulated under Mr. Biden’s pressure undermines the war efforts and hardens Hamas’s demands on hostage release. 

As America, Qatar, and Egypt push Hamas leaders, the only man who counts is the terrorist organization’s Gaza commander, Yahaya Sinwar, who is yet to signal any willingness to release the 133 hostages held there under any condition. 

With the gaps between America and Israel growing, the Iranians, their proxies, and especially Mr. Sinwar “don’t need to do anything other than just sit back and watch the show,” Mr. Brodsky says.