Islamabad, June 23, 202: Oil prices skyrocketed Monday after the United States launched direct strikes on Iran’s key nuclear sites, sending shockwaves through global financial markets and triggering fears of a full-scale conflict in the Middle East. The attack, which hit Iran’s facilities in Isfahan, Natanz, and Fordow, has reignited tensions in the region, with Tehran warning of severe retaliation.
Brent crude surged as high as 5.7%, later stabilizing at $79.12 per barrel, while U.S. West Texas Intermediate rose 2.8% to $75.98. Traders are now bracing for potential disruption in the Strait of Hormuz, a critical chokepoint that handles nearly 25% of global oil supply and 20% of global LNG traffic.
Investors Flee Risk as Equities, Airlines Dip
U.S. stock futures slid, with S&P 500 and Nasdaq futures down 0.3% and 0.6%, respectively. Asian and European markets followed suit. The MSCI Asia-Pacific Index lost 0.5%, while Japan’s Nikkei 225 shed 0.9%. European futures for DAX, EUROSTOXX 50, and FTSE 100 dropped between 0.5%–0.7%.
Defense and oil shipping stocks rallied amid expectations of higher freight and security premiums. Meanwhile, airline shares tumbled on rising fuel price risks. Gold briefly spiked to $3,363/oz, before easing. The U.S. dollar strengthened, buoyed by safe-haven buying, as Treasury yields ticked higher.
Iran Warns of ‘Everlasting Consequences’
Iran labeled the U.S. attack a blatant violation of its sovereignty and warned of “everlasting consequences.” Analysts now fear a tit-for-tat cycle could lead to major disruptions. “Iran is very likely to respond militarily,” said Dr. Ben Zala of Monash University. “Markets will react instantly.”
Strategists suggest Tehran may target oil infrastructure or tanker routes in the Gulf rather than fully block the Strait. “Even minor disruptions can push Brent crude beyond $100,” said Vivek Dhar of the Commonwealth Bank of Australia.
Oil Price Spike May Fuel Global Inflation Fears
The oil price rally has also revived fears of inflation and supply chain instability, just as central banks were preparing to cut interest rates. U.S. Fed officials remain split — Mary Daly hinted at a possible fall rate cut, while Christopher Waller suggested a more aggressive timeline, possibly by July.
Read more: Sharp Oil Prices Decline Hits Markets on Supply Fears
Geopolitical Jitters Cloud Economic Outlook
Beyond oil, global tech and bond markets are also under pressure. TSMC, Samsung, and SK Hynix saw stock losses after reports of potential U.S. sanctions tightening. Bond spreads in Asia’s dollar-denominated markets widened, signaling growing credit risk.
With Israel continuing operations and Iran’s response still unknown, the global economy teeters on the edge. As one energy strategist in London put it:
“The world is holding its breath. The next move is Iran’s.”
Read More: Oil Prices Surge Amid Middle East Tensions
