Investors brace for spike in oil prices after US bombs Iran sites
A map showing the Strait of Hormuz and Iran is seen behind a 3D printed oil pipeline in this illustration taken June 22, 2025. REUTERS/Dado Ruvic/Illustration
NEW YORK — A US attack on Iranian nuclear sites could push oil prices even higher and trigger a knee-jerk rush to safety, investors said. They assessed how the latest escalation of tensions would ripple through the global economy.
The reaction in Middle East stock markets, which trade on Sunday, suggested investors were assuming a benign outcome. This. even as Iran intensified its missile attacks on Israel in response to the sudden, deep US involvement in the conflict.
US President Donald Trump called the attack “a spectacular military success” in a televised address to the nation. Trump said Iran’s “key nuclear enrichment facilities have been completely and totally obliterated.” He said the US military could go after other targets in Iran if the country did not agree to peace.
READ: Oil to open higher as US strikes on Iran boost supply risk premium
Iran said it reserves all options to defend itself, and warned of “everlasting consequences.”
Speaking in Istanbul, Iran’s Foreign Minister Abbas Araqchi said Tehran was weighing its options for retaliation.It would consider diplomacy only after carrying out its response.
Investors said they expected US involvement would cause a stock market selloff and a possible bid for the dollar and other safe-haven assets when major markets reopen. Still, they also said much uncertainty remained.
“I think the markets are going to be initially alarmed, and I think oil will open higher,” said Mark Spindel, chief investment officer at Potomac River Capital.
“We don’t have any damage assessment and that will take some time. Even though (Trump) has described this as ‘done’, we’re engaged,” Spindel said.
Uncertainty, volatility
“I think the uncertainty is going to blanket the markets, as now Americans everywhere are going to be exposed. It’s going to raise uncertainty and volatility, particularly in oil,” he added.
One indicator of how markets will react in the coming week was the price of ether. It is the second-largest cryptocurrency and a gauge of retail investor sentiment.
Ether was down 8.5 percent on Sunday, taking losses since the first Israeli strikes on Iran on June 13 to 13 percent.
Most Gulf stock markets, however, seemed unconcerned by the early morning attacks. The main indexes in Qatar, Saudi Arabia and Kuwait were up slightly or flat. Israel’s Tel Aviv main index was at an all-time high.
READ: Iran threatens US bases in response to strikes on nuclear sites
A key concern for markets centers around the potential impact of Middle East developments on oil prices and thus on inflation. Rising inflation could dampen consumer confidence and lessen the chance of near-term interest rate cuts.
Saul Kavonic, a senior energy analyst at equity research firm MST Marquee in Sydney, said Iran could respond by targeting American interests in the Middle East. These include Gulf oil infrastructure in places such as Iraq or harassing ship passages through the Strait of Hormuz.
The Strait of Hormuz lies between Oman and Iran. It is the primary export route for oil producers such as Saudi Arabia, the United Arab Emirates, Iraq and Kuwait.
Oil prices on ‘a path towards $100’
“Much depends on how Iran responds in the coming hours and days. But this could set us on a path towards $100 oil if Iran respond as they have previously threatened to,” Kavonic said.
Global benchmark Brent crude futures have risen as much as 18 percent since June 10, hitting a near five-month high of $79.04 on Thursday. Meanwhile, the S&P 500 has been little changed, following an initial drop when Israel launched its attacks on Iran on June 13.
Jamie Cox, managing partner at Harris Financial Group, said oil prices would likely spike before leveling off in a few days. The attacks could lead Iran to seek a peace deal with Israel and the United States.
“With this demonstration of force and total annihilation of its nuclear capabilities, they’ve lost all of their leverage and will likely hit the escape button to a peace deal,” Cox said.
Economists warn that a dramatic rise in oil prices could damage a global economy already strained by Trump’s tariffs.
Still, any pullback in equities might be fleeting, history suggests. During past eruptions of Middle East tensions, stocks initially languished but soon recovered to trade higher in the months ahead. These include the 2003 Iraq invasion and the 2019 attacks on Saudi oil facilities.
On average, the S&P 500 slipped 0.3 percent in the three weeks following the start of conflict. But it was 2.3 percent higher on average two months following the conflict, according to data from Wedbush Securities and CapIQ Pro.
