Global markets plunged and oil prices spiked on Friday after Israel launched coordinated strikes on Iranian nuclear and military infrastructure, sharply escalating tensions in the Middle East and raising the specter of a regional war.
Investors dumped stocks and rushed into safe-haven assets following Israeli Prime Minister Benjamin Netanyahu’s confirmation that the military had struck Iran’s Natanz enrichment facility and key ballistic missile sites. In a video statement, Netanyahu warned, “This operation will continue for as many days as it takes to remove this threat.”
He claimed the strikes targeted the heart of Iran’s nuclear programme, including the scientists “working on the Iranian bomb.”
Israeli military sources justified the operation, citing intelligence that Iran was rapidly approaching the “point of no return” in its nuclear weapons development.
In a swift and fiery response, Iran’s Supreme Leader Ayatollah Ali Khamenei vowed revenge, declaring, “The Zionist regime has set itself up for a bitter and painful fate, and it will certainly face it.”
Tensions Threaten Wider Conflict
Adding to the uncertainty, Israel’s Defence Minister Israel Katz said the country was bracing for imminent missile and drone retaliation, while Iran warned that any broader conflict could draw in the United States.
Though Washington denied any role in the Israeli operation, Tehran’s foreign ministry pointed fingers at the US, insisting that such an assault “could not have been carried out without coordination and permission from Washington.” Iranian officials added that the US would be “held responsible for the consequences.”
Former US President Donald Trump also weighed in, saying a “massive conflict” in the region was a real possibility and expressing concern that any further escalation could scuttle progress toward a nuclear deal.
Markets in Freefall, Oil Rockets
The geopolitical turmoil sent shockwaves through global financial markets. Crude prices skyrocketed as fears mounted over potential disruptions to oil supply routes particularly through the Strait of Hormuz, which handles roughly 20% of the world’s oil trade.
Brent crude surged more than 12% at one point before easing to 5.4% higher at $73.11 per barrel. West Texas Intermediate climbed to $71.75 per barrel, also up 5.4%.
Stephen Innes of SPI Asset Management described the situation bluntly: “The Middle East powder keg just blew the lid off global markets. Equity futures are plummeting. Bond yields are sinking. Gold and oil are skyrocketing.”
He warned that if Iran retaliates forcefully or if the Strait of Hormuz becomes a target, oil could leap another $15 per barrel. “We’re staring down a scenario that could redefine the macro narrative for the rest of 2025,” Innes said.
JPMorgan Chase had already cautioned earlier in the week that oil could spike to $130 per barrel under a worst-case war scenario.
Equities, Currencies React Sharply
Stock markets across Asia and Europe were sharply lower:
- Tokyo’s Nikkei 225 closed down 0.9% at 37,834.25
- Hong Kong’s Hang Seng Index dropped 0.6% to 23,892.56
- Shanghai Composite fell 0.8% to 3,377.00
- London’s FTSE 100 was down 0.5% at 8,838.12
Safe-haven assets rallied:
- Gold soared past $3,400 an ounce
- US bond yields dropped as traders fled to safety
Currency markets also reflected risk-off sentiment:
- Dollar/Yen ticked up to 143.76
- Euro/Dollar slipped to $1.1542
- Pound/Dollar fell to $1.3564
Even before the strikes, market sentiment had been on edge following Trump’s renewed threats to impose unilateral tariffs on foreign exports to the US, further inflaming fears of a global trade war.
As the world watches closely for Tehran’s next move, analysts warn that any miscalculation could trigger a cascading crisis with global economic implications.
