Oil prices surged nearly 8%, while gold climbed over 1.15% on Friday morning after Israel launched a targeted strike on Iranian nuclear facilities, ballistic missile factories, and military commanders, escalating tensions in the already volatile Middle East region.
In a statement following the attack, the Israeli Defense Forces emphasized, “Weapons of mass destruction in the hands of the Iranian regime are a threat to the State of Israel and a significant threat to the entire world. The State of Israel will not allow a regime whose goal is the destruction of the State of Israel to possess weapons of mass destruction.”
Iran has since vowed to “give a harsh response” to the strike, according to Reuters, raising fears of a potential wider conflict.
Oil Prices Spike Amid Heightened Risk
The strike intensified concerns over oil supply disruptions in one of the world’s largest oil-producing regions. Brent crude futures jumped nearly 8% to an intraday high of $75.32 per barrel — their highest since April 2 — before slightly retreating. Similarly, West Texas Intermediate crude rose nearly 8% to levels not seen since early February.
“The Israeli attack on Iran has heightened the risk premium further,” said Saul Kavonic, senior energy analyst at MST Marquee. Kavonic cautioned that a significant impact on oil supply would likely require Iranian retaliation targeting regional oil infrastructure. He noted that in an extreme scenario, Iran could disrupt the supply of up to 20 million barrels per day, including by targeting passage through the Strait of Hormuz.
Safe-Haven Demand Supports Gold and Currencies
Investors sought refuge in traditional safe-haven assets amid growing geopolitical uncertainty. Gold prices reached nearly $3,430 per ounce in Asian trading, gaining about 1.15% for the day.
“Gold is up for the second straight day, largely on heightened geopolitical risks,” said Peter Grant, Vice President and Senior Metals Strategist at Zanier Metals. “If gold clears $3,400 again, minor resistance at $3,417 and $3,431 remains — but a breakout to new all-time highs looks likely ultimately.”
The U.S. dollar, along with safe-haven currencies such as the Japanese yen and Swiss franc, also strengthened following Israel’s pre-emptive strike.
Market Reactions and Risk Sentiment
Equity markets responded negatively to the news, with U.S. stock futures falling 1.5% and Asian markets experiencing similar declines on Friday morning. Cryptocurrency markets were notably impacted, with Bitcoin dropping 3.5% and Ether plunging nearly 9.5%.
“While we await further news and a potential response from Iran, we are likely to see a further deterioration in risk sentiment as traders cut risk-seeking positions ahead of the weekend,” commented Tony Sycamore, Market Analyst at IG.
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