According to a statement released by Israeli Prime Minister Benjamin Netanyahu, “We struck at the heart of Iran’s nuclear weaponization program.” “We went after Iran’s top nuclear scientists who were developing the Iranian bomb. Additionally, we targeted the core of Iran’s ballistic missile program. The operation, he continued, “will continue for as many days as it takes to remove this threat.”
The July delivery of the U.S. benchmark West Texas Intermediate crude (CLN25) (CL.1) reached a peak of $77.61, but more recently, it was up about 6% at slightly over $71.
While key contracts were once again over their lows, the news caused U.S. stock-market futures to decline.
At 42,749, the Dow Industrials contract (YM00) dropped 567 points, or 1.3%. Contracts for the Nasdaq 100 (NQ00) and S&P 500 (ES00) both experienced decreases.
While integrated oil majors like BP and Shell saw an increase, European stocks, XX:SXXP, opened lower.
“At this point, one would assume the risk to oil supplies is very high,” Phil Flynn, a Price Futures Group market analyst, said over the phone with MarketWatch. Investors will be keeping an eye on Iran’s response, especially any attempts to block the Strait of Hormuz, a vital waterway and possible chokepoint. Approximately 20% of all seaborne crude worldwide passes through the strait.
“This escalation is seismic. War risk has historically been valued by markets as background noise that is confined, remote, and mostly symbolic. “That’s over,” SPI Asset Management managing partner Stephen Innes wrote in an email on Thursday evening.
“An Israeli strike on Iranian territory crosses a geopolitical Rubicon, particularly if it targets infrastructure connected to nuclear. He stated, “This is direct military action between regional powers with global consequences; we’re no longer talking tit-for-tat drone theatrics.” It alerts all central bankers, risk managers, and energy traders. This is now a potentially massive regime shift rather than only a regional issue.
Iran claimed that some top military officers and nuclear scientists were killed, while the Associated Press confirmed that several locations in Tehran and the surrounding area had been hit.
Ayatollah Ali Khamenei, the leader of Iran, said in a statement that Israel “should anticipate a harsh punishment.” There have reportedly been about 100 drone launches against Israel.
Israel acted alone, according to U.S. Secretary of State Marco Rubio. “We are not involved in strikes against Iran and our top priority is protecting American forces in the region,” he said in a statement, cautioning Iran against striking back against American targets.
The board of governors of the International Atomic Energy Agency censured Iran earlier Thursday for the first time in two decades for refusing to cooperate with its nuclear inspectors. Negotiations between the United States and Iran to achieve a new nuclear accord were halted.
During Thursday’s regular trading session, gold had gained ground while oil had marginally retreated.
As policymakers struggle with the uncertainties surrounding the effects of President Donald Trump’s tariff actions, a prolonged spike in crude prices might also act as a broader shock, making the outlook for inflation and growth even more complex.
“Traders will remain on edge until the scope for escalation of the conflict is clear,” Flynn said, adding that previous geopolitical flare-ups have tended to see a surge in crude but swiftly give back gains. He suggested that traders may have been complacent due to crude’s propensity to quickly recover from price increases, including those that followed the Oct. 7, 2023, Hamas attack on Israel and the conflicts between Israel and Iran last year.
“We’ve had so many close calls with oil price spikes but then no significant disruption to supplies,” he stated. It now seems likely that there will be some effect, either through Tehran’s reprisal or tighter export sanctions.
This report is still being developed and will be updated.
