Crude oil prices jump, equities sink as Israel rains missiles on Iran in retaliation

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Global oil and gold prices have jumped, while shares have slumped after reports of explosions near the Isfahan airport emerged just minutes after a US official told the Australian broadcaster ABC that Israel had fired missiles on one Iran site.

Brent crude oil prices surged by over 3 per cent to approximately $90 per barrel during Friday morning’s trading session in Asia, while the price of gold remained near a new all-time high, surpassing $2,400 per ounce. Following the development in Iran, key stock indices in Japan, Hong Kong, and South Korea experienced declines.

Crude oil prices have surged since the beginning of the year, primarily due to escalating tensions in the Middle East and ongoing supply cuts by OPEC+. Given that the region contributes approximately one-third of the world’s crude oil output, developments there heavily influence global energy markets. The sustained increase in energy prices could elevate risks for the global economy and present a significant challenge for central bankers worldwide.

“We continue to highlight the heightened risk that this war will move up the escalation ladder,” RBC Capital Markets LLC analysts including Helima Croft quoted by Bloomberg saying in a note before crude’s spike. “Oil supplies could be caught in the cross-hairs of this metastasizing conflict.”

Israeli missiles have hit a site in Iran, ABC News reported late on Thursday, citing a U.S. official, while Iranian state media reported an explosion in the center of the country, days after Iran launched a retaliatory drone strike on Israel.

Iran’s Fars news agency said an explosion was heard at an airport in the central city of Isfahan but the cause was not immediately known. Iran suspended flights over the cities of Isfahan, Shiraz and Tehran, state media reported.

Several Iranian nuclear sites are located in Isfahan province, including Natanz, centerpiece of Iran’s uranium enrichment program.

Tehran’s Imam Khomeini International Airport was closed to all flights until 0700 GMT, according to a notice to airmen posted on a U.S. Federal Aviation Administration database.

Some Emirates and Flydubai flights that were flying over Iran early on Friday made sudden sharp turns away from the airspace, according to flight paths shown on tracking website Flightradar24.