Oil Surges, Stocks Plunge Amid Middle East Tensions After Israel Strikes Iran
Gold futures rose nearly 1% to $3,410 per ounce
A dramatic escalation in Middle East tensions sent shockwaves through global financial markets on Friday, June 13, 2025, after Israel launched a major military strike on Iranian nuclear facilities and senior military leaders. Iran retaliated by dispatching over 100 drones toward Israeli territory, marking the most significant confrontation between the two countries in decades.
Market Reaction
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Oil Prices:
Oil prices surged sharply, with Brent crude spiking by 5–13% in early trading. At one point, Brent briefly exceeded $78 per barrel before stabilising, while U.S. benchmark crude jumped more than 7% to above $72 per barrel. -
The surge reflects fears of potential disruptions to oil supplies from a region responsible for about one-third of global oil production and concerns over possible blockades or attacks on key shipping routes like the Strait of Hormuz.
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Stock Markets:
Global stock markets tumbled as investors rushed to reduce risk. U.S. stock futures dropped by over 1%, with the Dow Jones Industrial Average and Nasdaq Composite both falling more than 1% in premarket trading. -
Asian and European indices followed suit: Japan’s Nikkei and South Korea’s KOSPI each lost close to 1%, while Germany’s DAX and France’s CAC 40 fell by 1.4% and 1%, respectively.
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Dubai’s main share index in the Middle East saw its steepest intraday loss since 2022, dropping over 5% before partially recovering.
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Safe-Haven Assets:
Investors flocked to traditional safe havens. Gold futures rose nearly 1% to $3,410 per ounce, and currencies like the Swiss franc and Japanese yen strengthened against the U.S. dollar. U.S. Treasuries also gained value, reflecting the flight to safety.
Analysts noted that the Israeli strike and Iranian response triggered “one-sided volatility,” with traders hedging against the risk of further escalation over the weekend.
Defensive sectors such as energy, utilities, and defence stocks outperformed, while travel and airline stocks suffered due to regional airspace closures and flight disruptions
The main economic risk identified is the potential for oil supply disruptions if the conflict intensifies or if Iran attempts to block the Strait of Hormuz, a critical chokepoint for global energy trade23. While there has been no direct impact on oil production facilities so far, the threat of further military action keeps markets on edge.
Summary Table: Key Market Moves
| Asset/Class | Change/Reaction | Reason/Context |
|---|---|---|
| Oil (Brent) | +5% to +13% | Supply fears, risk of Strait of Hormuz closure |
| Gold | +0.8% to +1% | Safe-haven demand |
| U.S. Stocks | -1% to -1.4% futures | Risk aversion, global selloff |
| Asian/European Stocks | -0.6% to -1.4% | Contagion from Middle East tensions |
| Swiss Franc/Yen | Strengthened | Safe-haven flows |
| Dubai Shares | -5.1% intraday | Regional instability |
Geopolitical Context
The Israeli strikes targeted Iran’s nuclear enrichment sites and senior military officials, occurring just days before a planned round of nuclear negotiations between Iran and the United States. The U.S. has denied any involvement in the operation.
The International Atomic Energy Agency’s recent censure of Iran has further strained diplomatic efforts, and the risk of a broader regional conflict remains high.
The Israeli strike on Iran and subsequent Iranian retaliation have triggered a sharp selloff in global equities and a surge in oil prices, as investors brace for the possibility of further escalation in a region vital to energy markets.
The situation remains highly volatile, with safe-haven assets in demand and the outlook for risk assets clouded by geopolitical uncertainty.
