MW Oil prices surge as much as 14%, U.S. stock futures fall as Israel strikes Iran
By Mike Murphy and William Watts
Oil futures shot higher and U.S. stock-market futures sank Thursday evening as Israel said it attacked sites in Iran, raising new fears of an all-out conflict in the Middle East.
"We struck at the heart of Iran's nuclear weaponization program," Israeli Prime Minister Benjamin Netanyahu said in a statement. "We targeted Iran's leading nuclear scientists, working on the Iranian bomb. We also struck at the heart of Iran's ballistic missile program." He added that the operation "will continue for as many days as it takes to remove this threat."
U.S. benchmark West Texas Intermediate crude for July delivery (CLN25) (CL.1) rose as high as $77.61, but more recently were up closer to 6% at just over $71.
The news sent U.S. stock-market futures falling, but again, major contracts were off their lows.
The Dow industrials contract (YM00) fell 567 points, or 1.3%, to 42,749. S&P 500 (ES00) and Nasdaq 100 (NQ00) contracts saw similar declines.
European stocks XX:SXXP opened lower but integrated oil companies including BP and Shell rose.
"At this point, one would assume the risk to oil supplies is very high," Phil Flynn, market analyst at Price Futures Group, told MarketWatch in a phone interview. Traders will be watching how Iran retaliates, including any potential efforts to close the Strait of Hormuz, a crucial waterway and potential chokepoint. Around 20% of global seaborne crude moves through the strait.
"This is a seismic escalation. Markets had long priced war risk as background noise - contained, distant and largely symbolic. That's over," Stephen Innes, managing partner at SPI Asset Management, said in emailed comments Thursday night.
"An Israeli strike on Iranian soil, especially if it hits nuclear-related infrastructure, crosses a geopolitical Rubicon. We're no longer talking tit-for-tat drone theatrics; this is direct military action between regional powers with global consequences," he said. "It puts every energy trader, risk manager, and central banker on alert. This isn't just a regional story anymore - it's a potential macro regime shift."
The Associated Press reported multiple sites in Tehran and around Iran had been struck, and Iran said some top military leaders and nuclear scientists were killed.
In a statement, Iranian leader Ayatollah Ali Khamenei said Israel "should anticipate a harsh punishment." Some 100 drones have been launched at Israel, according to reports.
U.S. Secretary of State Marco Rubio said Israel acted alone. "We are not involved in strikes against Iran and our top priority is protecting American forces in the region," he said in a statement, while warning Iran not to retaliate against U.S. targets.
Earlier Thursday, the International Atomic Energy Agency's board of governors censured Iran for the first time in 20 years for its refusal to work with its nuclear inspectors. The U.S. had been negotiating with Iran in efforts to reach a new nuclear agreement, but those talks had stalled.
Oil had pulled back slightly during Thursday's regular trading session, while gold had gained ground.
A sustained jump in crude prices could also serve as a wider shock, further complicating the outlook for inflation and growth as policy makers grapple with uncertainty surrounding the effects of President Donald Trump's tariff measures.
Flynn noted that past geopolitical flare-ups have tended to see crude spike but quickly give back gains, but until the scope for escalation of the conflict is clear, traders will remain on edge. That tendency of crude to quickly give back price spikes, such as those seen after the Oct. 7, 2023, Hamas attack on Israel and an exchange of hostilities between Israel and Iran last year, may have lulled traders into a sense of complacency, he said.
"We've had so many close calls with oil price spikes but then no significant disruption to supplies," he said. Now it appears likely there will be some impact, whether via retaliation by Tehran or increased sanctions on Iran's exports.
This is a developing report and will be updated.
-Mike Murphy -William Watts
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June 13, 2025 03:47 ET (07:47 GMT)
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