By Ronnie Harui and Kimberley Kao
Oil prices surged and equities fell on Friday after Israel launched a wide-ranging attack on Iran, rattling markets and sending investors fleeing into safe-haven assets.
Israel said the attack targeted Iran's nuclear program and other military sites, as well as Iranian military commanders and nuclear scientists.
Front-month WTI crude-oil futures were last up 7.8% at $73.33 a barrel after hitting an intraday high of $77.62. Front-month Brent climbed 7.3% to $74.44 a barrel after touching $78.50 earlier.
"The announcement of Israeli airstrikes on Iran has reignited fears of a broader regional conflict, driving oil prices higher on potential supply disruption risks," said Charu Chanana, chief investment strategist at Saxo Markets.
Most major indexes were in the red, with Japan's Nikkei Stock Average ending 0.9% lower and South Korea's Kospi dropping 0.9%.
In China, the benchmark Shanghai Composite Index lost 0.75%, while Hong Kong's Hang Seng Index shed 1.0%. India's Sensex was last down 0.8%.
Despite the index declines, the spike in oil prices gave a boost to some energy stocks.
Shares of Australia's large oil and natural-gas producers jumped early in the day, while Chinese energy stocks were also broadly higher.
Defense stocks in markets including China and South Korea gained too as investors watched the news unfold, including Israel saying it had started shooting down Iranian drones.
Safe-haven assets such as gold and government bonds strengthened as the attack spurred investors to pare down risk.
Spot gold rose 1.2% to $3,425.71 per troy ounce, while U.S. 10- and 13-year treasury yields fell to a one-month low.
"Markets are on high alert, justifiably fearing a rapid escalation in the conflict that may spiral into an unbridled war," Vishnu Varathan at Mizuho Securities said in a note.
All eyes are on where oil prices will go next.
A de-escalation could bring oil back below $70 a barrel, while a broader conflict could push oil toward $90-$100 a barrel, said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
"If tensions disrupt transit through the Strait of Hormuz, LNG flows could also be hit," she added.
If high oil prices persist, markets will brace for broader economic impact.
Sharp increases in crude will likely feed through to higher inflation expectations, said Cedric Chehab, chief economist at BMI, a Fitch Solutions firm.
That would come at a time when global growth is already slowing, meaning central banks might not have as much bandwidth to cut interest rates, he said.
Write to Ronnie Harui at ronnie.harui@wsj.com and Kimberley Kao at kimberley.kao@wsj.com
(END) Dow Jones Newswires
June 13, 2025 03:36 ET (07:36 GMT)
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