Oil prices surged to multi-year highs and global stock markets tanked on Friday after Israel launched precision strikes on Iranian nuclear and military facilities, prompting Iran to retaliate with missile and drone attacks on Israeli military targets late yesterday. The escalating conflict has ignited fears of a broader regional war, with both sides issuing dire warnings.
Israeli Strikes and Iranian Retaliation
Israeli Prime Minister Benjamin Netanyahu announced the strikes in a video statement, vowing to continue operations until Iran’s nuclear threat is neutralized. “We hit the core of Iran’s nuclear enrichment program at Natanz and targeted their ballistic missile facilities,” he said, adding that nuclear scientists linked to Iran’s atomic ambitions were also struck. Israeli army officials cited intelligence indicating Iran was nearing a “point of no return” in its nuclear program, potentially acquiring a weapon within months.
In response, Iran launched a barrage of over 50 missiles and drones targeting Israeli airbases and military installations on June 13, 2025. Iranian state media reported that the strikes were in retaliation for Israel’s “aggression” and aimed to “restore deterrence.” Supreme Leader Ayatollah Ali Khamenei condemned Israel’s actions, stating, “The Zionist regime will face a bitter and painful fate for this crime.” Iranian officials claimed minimal damage to their nuclear sites but confirmed disruptions at some military bases.
Global Market Turmoil
The tit-for-tat attacks sent shockwaves through global markets. Brent crude and West Texas Intermediate oil contracts spiked over 15% at their peak, reaching $75.20 and $73.85 per barrel, respectively—the highest since December 2022. Prices later moderated slightly after Iran assured that its key refineries remained operational, but both contracts closed up over 7%. Analysts warned that any disruption to the Strait of Hormuz, through which 20% of global oil flows, could push Brent above $90.
Equity markets bled red, with Asia and Europe seeing sharp declines. Tokyo’s Nikkei 225 fell 1.2%, Hong Kong’s Hang Seng dropped 0.9%, and London’s FTSE 100 slid 0.7%. US futures pointed to a steep opening loss on Wall Street. Safe-haven assets soared, with gold breaching $3,450 an ounce and bond yields dipping as investors fled riskier assets.
“The Middle East is a tinderbox, and this escalation has blown the lid off,” said Stephen Innes of SPI Asset Management. “If Iran’s retaliation escalates further or Israel doubles down, we’re looking at a macro-defining crisis for 2025. Oil could hit $100 if the Strait becomes a flashpoint.”
Geopolitical Fallout
Tehran accused the United States of complicity, with its foreign ministry claiming the Israeli strikes “could not have occurred without Washington’s coordination.” Iran also renewed threats to target US bases in the region if drawn into a wider conflict. A US official denied involvement, emphasizing that the operation was solely Israeli-led.
US President Donald Trump, who had previously hinted at a “close” nuclear deal with Iran, warned that the strikes and Iran’s counterattack could derail diplomacy. “We’re staring at a massive conflict if this spirals,” he said. The attacks come amid heightened US-Iran tensions, exacerbated by Trump’s recent threats of unilateral trade tariffs, which have already rattled markets.
Israeli Defence Minister Israel Katz warned of an imminent “large-scale missile and drone attack” from Iran, prompting heightened air defenses across Israel. In Tehran, officials signaled readiness for further retaliation if Israel launches additional strikes, raising fears of a prolonged conflict.
Economic Implications
JPMorgan Chase analysts warned that a worst-case scenario—such as sustained Iranian retaliation or a blockade of the Strait of Hormuz—could drive oil prices above $130, hammering global growth. Market sentiment was already fragile after Trump’s April 2 announcement of sweeping tariffs, which he paused for 90 days but recently revived with plans to send “take it or leave it” trade letters to other nations.
Despite Iran’s assurances, concerns linger over potential supply disruptions. Iran, an OPEC member, produces about 3.8 million barrels of oil daily, and any significant outage could tighten global supplies already strained by geopolitical risks.
Key Market Figures (as of 0810 GMT, June 14, 2025)
- West Texas Intermediate: UP 7.1% at $73.85 per barrel
- Brent North Sea Crude: UP 7.3% at $75.20 per barrel
- Tokyo – Nikkei 225: DOWN 1.2% at 37,503.12 (close)
- Hong Kong – Hang Seng Index: DOWN 0.9% at 23,678.45 (close)
- Shanghai – Composite: DOWN 1.0% at 3,343.23 (close)
- London – FTSE 100: DOWN 0.7% at 8,776.34
- Dollar/yen: UP at 143.92 yen from 143.76 yen
- Euro/dollar: DOWN at $1.1518 from $1.1542
- Pound/dollar: DOWN at $1.3532 from $1.3564
- Gold: UP 2.8% at $3,452.60 per ounce
The rapidly unfolding crisis has left markets and policymakers on edge, with the risk of further escalation threatening to reshape the global economic landscape.
AFP
