Israel Airstrikes Iranian Nuclear Facilities, Triggering Global Market Volatility

On June 13, 2025, Israel launched a series of airstrikes targeting Iranian nuclear facilities and military installations, significantly impacting global financial markets. The operation, codenamed "Operation Rising Lion," aimed to degrade Iran's nuclear capabilities and eliminate key military leaders.

The immediate aftermath saw Brent crude oil prices surge by 7%, later escalating to an 11% increase, reaching their highest levels in a month. This spike was driven by concerns over potential disruptions to oil supplies, particularly through the Strait of Hormuz, a critical chokepoint for global oil transportation.

Global stock markets experienced volatility in response to the conflict. U.S. indices, including the S&P 500 and the Dow Jones Industrial Average, saw declines of 1.8% and 0.8%, respectively, on June 13. Investors sought safe-haven assets, leading to a 1% increase in gold prices.

The escalation has complicated monetary policy decisions for central banks. The Federal Reserve and the Bank of England are now more cautious about cutting interest rates due to concerns that rising oil prices could fuel inflation. Economists suggest that the conflict may deter central banks from implementing rate cuts in the near future.

In response to the Israeli strikes, Iran has threatened to close the Strait of Hormuz, through which nearly 20% of global oil consumption passes. Such an action could cause oil prices to surge beyond recent increases, potentially exceeding $100 to $150 per barrel. However, analysts warn that closing the strait would also harm Iran's economy, as its oil exports are entirely sea-based and heavily reliant on this passage.

The airstrikes have led to widespread panic among Iranian civilians. Residents in Tehran began fleeing the city en masse, particularly toward northern provinces. This exodus was accelerated when the Israeli military issued warnings to civilians living near weapons production facilities, urging them to evacuate. Eyewitnesses reported severe traffic congestion, fuel shortages, and long queues at gas stations.

Iran has signaled a desire to reduce hostilities with Israel and resume nuclear negotiations with the United States, provided there is no direct U.S. intervention in the conflict. Tehran has sent messages through international mediators emphasizing the benefits of containing violence. However, the situation remains volatile, with ongoing military actions and diplomatic efforts unfolding simultaneously.

The Israel-Iran conflict has introduced significant uncertainty into global markets, underscoring the interconnectedness of geopolitical events and economic stability. As the situation develops, stakeholders worldwide remain vigilant, assessing the potential long-term ramifications of this escalating crisis.