Investors brace for oil price spike after Iran attack
The US attack on Iranian nuclear sites could lead to a knee-jerk reaction in global markets when they reopen, sending oil prices higher and triggering a rush to safety, investors say as they assess how the latest escalation of tensions will ripple through the global economy.
The attack, announced by President Donald Trump on social media site Truth Social, deepens US involvement in the Middle East conflict.
That was the question going into the weekend, when investors were mulling a host of different market scenarios.
In the immediate aftermath of the announcement, they expected the US involvement was likely to cause a sell-off in equities and a possible bid for the dollar and other safe-haven assets when trading began, but also said much uncertainty about the course of the conflict 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 he has described this as 'done', we're engaged. What comes next?" Spindel said.
"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."
Spindel, however, said there was time to digest the news before markets opened.
A key concern for markets would centre around the potential impact of the developments in the Middle East on oil prices and thus on inflation.
A rise in inflation could dampen consumer confidence and lessen the chance of near-term US interest rate cuts.
"This adds a complicated new layer of risk that we'll have to consider and pay attention to," said Jack Ablin, chief investment officer of Cresset Capital.
"This is definitely going to have an impact on energy prices and potentially on inflation as well."
While global benchmark Brent crude futures have risen as much as 18 per cent since June 10, hitting an almost five-month high of $US79.04 ($A121.82) on Thursday, the S&P 500 has been little changed, following an initial drop when Israel launched its attacks on Iran on June 13.
Before the US attack on Saturday, analysts at Oxford Economics modelled three scenarios, including a de-escalation of the conflict, a complete shutdown in Iranian oil production and a closure of the Strait of Hormuz, "each with increasingly large impacts on global oil prices".
In the most severe case, global oil prices jump to about $US130 ($A200) per barrel, driving US inflation close to six per cent by the end of 2025, Oxford said in the note.
"Although the price shock inevitably dampens consumer spending because of the hit to real incomes, the scale of the rise in inflation and concerns about the potential for second-round inflation effects likely ruin any chance of rate cuts in the US this year," Oxford said in the note, published before the US strikes.
Economists warn a dramatic rise in oil prices could damage a global economy already strained by Trump's tariffs.
An escalation in the conflict could have mixed implications for the US dollar, which has tumbled amid worries over diminished US exceptionalism.
In the event of US direct engagement in the Iran-Israel war, the dollar could initially benefit from a safety bid, analysts said.
"Do we see a flight to safety? That would signal yields going lower and the dollar getting stronger," said Steve Sosnick, chief market strategist at IBKR in Greenwich, Connecticut.
"It's hard to imagine stocks not reacting negatively and the question is how much. It will depend on Iranian reaction and whether oil prices spike."
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Daily Telegraph
19 minutes ago
- Daily Telegraph
World braces for what Iran might do next after US attacks three nuclear sites
Don't miss out on the headlines from World. Followed categories will be added to My News. Israel has shut down schools and banned gatherings across the country, and American troops are bracing for counter-attacks, as the world waits to see how Iran will respond to today's US strikes. Iran has already launched missiles at Israel as its Tel Aviv citizens scramble to shelter with reports of some casualties. President Donald Trump said the US 'successfully' carried out air strikes on three Iranian nuclear sites, 'obliterating' the Fordow facility as well as those in Natanz and Isfahan. After the attacks, Hossein Shariatmadari, a representative of Iran's Ayatollah Ali Khamenei, said the Islamic republic was ready to respond. 'Now it is our turn to, without wasting time, as a first step, fire missiles at the US naval fleet in Bahrain and at the same time close the Strait of Hormuz to American, British, German and French ships,' he said in the Iranian Kayhan newspaper. Later, an official statement from the Iranian Foreign Minister warned 'the United States has launched a dangerous war' and would be 'fully responsible' for the 'consequences'. Israeli air defence system fires to intercept missiles during an Iranian attack over Tel Aviv, Israel, Saturday, June 21, 2025. (AP Photo/Leo Correa) Mr Trump told Iran the US was willing to continue its aerial campaign on Iran, including 'greater' future attacks, if it did not comply with peace efforts. 'Any retaliation by Iran against the United States of America will be met with force far greater than what was witnessed tonight,' he said in a late-night post to Truth Social. As the world waits to see how the Iran will respond, US military leaders are reportedly warning troops to brace for potential retaliatory strikes. There are more than 40,000 US troops and civilians working for the Pentagon across the Middle East, according to figures from the New York Times, in nations such as Iraq, Bahrain, Kuwait, Qatar and the United Arab Emitrates. US President Donald Trump addresses the nation, alongside US Secretary of State Marco Rubio (R) from the White House in Washington, DC on June 21, 2025, following the announcement that the US bombed nuclear sites in Iran. Picture: Carlos Barria / NewsWire POOL Experts all agreed that Iran would retaliate against the US and Iran's foreign minister Seyed Abbas Araghchi hinted on social media that nothing was off the table. He described the US attack as 'outrageous' and one that 'will have everlasting consequences'. 'The United States, a permanent member of the United Nations Security Council, has committed a grave violation of the UN Charter, international law and the NPT by attacking Iran's peaceful nuclear installations,' he wrote on X. 'The events this morning are outrageous and will have everlasting consequences. Each and every member of the UN must be alarmed over this extremely dangerous, lawless and criminal behaviour.' 'In accordance with the UN Charter and its provisions allowing a legitimate response in self-defence, Iran reserves all options to defend its sovereignty, interest, and people.' This handout satellite image provided by Maxar Technologies shows the Isfahan nuclear enrichment facility in central Iran on June 14, 2025, after it was hit by Israeli strikes. President Donald Trump said June 21, 2025 the US military has carried out a "very successful attack" on three Iranian nuclear sites, including the underground uranium enrichment facility at Fordo. Picture: Satellite image ©2025 Maxar Technologies / AFP Retired US army officer John Spencer told ABC News that Iran could respond to the conflict via an 'irrational route'. 'It could go with Hezbollah, which still has a lot of capabilities, against Israel, (and where) there are hundred of thousands of American citizens,' he said. 'It could (activate) Shia-backed militia groups in Iraq to attack American bases. It's ballistic program, which is about 50 per cent destroyed, it could make that fatal mistake of launching ballistic missiles at American bases within its range.' Meanwhile Omar Rahman, from the Middle East Council on Global Affairs, told the ABC that Iran had its 'back to the wall' and it's only option was to retaliate to ensure the regime's credibility. 'I think you're going to see some sort of military response here against US assets and military installations in the region,' he said. 'That could be against aircraft carriers in the Persian Gulf, it could be against any number of the bases and tens of thousands of US soldiers stationed in the region.' Chillingly, others have warned that the US attack good push Iran to develop a nuclear weapon and this was likely the beginning of the war, rather than the end. A picture of the destruction at site of an Iranian missile attack in a residential area in Beersheba in southern Israel, on June 20, 2025. Israel and Iran exchanged fire again on June 20, a week into the war between the longtime enemies. (Photo by MAYA LEVIN / AFP) Israel, meanwhile, is bracing for further Iranian retaliation. Shortly after Mr Trump confirmed the US strikes, the Israel Defence Force's Home Front Command declared all schools across the country would close, social gatherings were banned and only essential businesses were allowed to operate, effective immediately. Israeli military spokesman Avichay Adraee, who heads the IDF's Arab media unit, issued an update to security restrictions in Israel. 'It was decided to move all regions of the country to the level of essential work,' he wrote on X. 'The instructions include prohibiting educational activities, gatherings, and work centres, with the exception of essential work areas.' People sit outside pitched tents as they take shelter at a bus station in Tel Aviv on June 21, 2025 amid fears of an Iranian missile attack. (Photo by AHMAD GHARABLI / AFP) Around the world some are sounding the alarm that the escalation of the war could result in dire consequences. United Nations Secretary-General Antonio Guterres warned the US strikes on Iran were a 'dangerous escalation in a region already on the edge – and a direct threat to international peace and security.' 'There is a growing risk that this conflict could rapidly get out of control – with catastrophic consequences for civilians, the region, and the world,' he said. 'At this perilous hour, it is critical to avoid a spiral of chaos. There is no military solution. The only path forward is diplomacy. The only hope is peace.' Originally published as World braces for what Iran will do next
News.com.au
29 minutes ago
- News.com.au
World braces for what Iran will do next
Israel has shut down schools and banned gatherings across the country, and American troops are bracing for counter-attacks, as the world waits to see how Iran will respond to today's US strikes. Iran has already launched missiles at Israel as its Tel Aviv citizens scramble to shelter with reports of some casualties. President Donald Trump said the US 'successfully' carried out air strikes on three Iranian nuclear sites, 'obliterating' the Fordow facility as well as those in Natanz and Isfahan. After the attacks, Hossein Shariatmadari, a representative of Iran's Ayatollah Ali Khamenei, said the Islamic republic was ready to respond. 'Now it is our turn to, without wasting time, as a first step, fire missiles at the US naval fleet in Bahrain and at the same time close the Strait of Hormuz to American, British, German and French ships,' he said in the Iranian Kayhan newspaper. Later, an official statement from the Iranian Foreign Minister warned 'the United States has launched a dangerous war' and would be 'fully responsible' for the 'consequences'. Mr Trump told Iran the US was willing to continue its aerial campaign on Iran, including 'greater' future attacks, if it did not comply with peace efforts. 'Any retaliation by Iran against the United States of America will be met with force far greater than what was witnessed tonight,' he said in a late-night post to Truth Social. As the world waits to see how the Iran will respond, US military leaders are reportedly warning troops to brace for potential retaliatory strikes. There are more than 40,000 US troops and civilians working for the Pentagon across the Middle East, according to figures from the New York Times, in nations such as Iraq, Bahrain, Kuwait, Qatar and the United Arab Emitrates. Experts all agreed that Iran would retaliate against the US and Iran's foreign minister Seyed Abbas Araghchi hinted on social media that nothing was off the table. He described the US attack as 'outrageous' and one that 'will have everlasting consequences'. 'The United States, a permanent member of the United Nations Security Council, has committed a grave violation of the UN Charter, international law and the NPT by attacking Iran's peaceful nuclear installations,' he wrote on X. 'The events this morning are outrageous and will have everlasting consequences. Each and every member of the UN must be alarmed over this extremely dangerous, lawless and criminal behaviour.' 'In accordance with the UN Charter and its provisions allowing a legitimate response in self-defence, Iran reserves all options to defend its sovereignty, interest, and people.' Retired US army officer John Spencer told ABC News that Iran could respond to the conflict via an 'irrational route'. 'It could go with Hezbollah, which still has a lot of capabilities, against Israel, (and where) there are hundred of thousands of American citizens,' he said. 'It could (activate) Shia-backed militia groups in Iraq to attack American bases. It's ballistic program, which is about 50 per cent destroyed, it could make that fatal mistake of launching ballistic missiles at American bases within its range.' Meanwhile Omar Rahman, from the Middle East Council on Global Affairs, told the ABC that Iran had its 'back to the wall' and it's only option was to retaliate to ensure the regime's credibility. 'I think you're going to see some sort of military response here against US assets and military installations in the region,' he said. 'That could be against aircraft carriers in the Persian Gulf, it could be against any number of the bases and tens of thousands of US soldiers stationed in the region.' Chillingly, others have warned that the US attack good push Iran to develop a nuclear weapon and this was likely the beginning of the war, rather than the end. Israel, meanwhile, is bracing for further Iranian retaliation. Shortly after Mr Trump confirmed the US strikes, the Israel Defence Force's Home Front Command declared all schools across the country would close, social gatherings were banned and only essential businesses were allowed to operate, effective immediately. Israeli military spokesman Avichay Adraee, who heads the IDF's Arab media unit, issued an update to security restrictions in Israel. 'It was decided to move all regions of the country to the level of essential work,' he wrote on X. 'The instructions include prohibiting educational activities, gatherings, and work centres, with the exception of essential work areas.' Around the world some are sounding the alarm that the escalation of the war could result in dire consequences. 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West Australian
29 minutes ago
- West Australian
United States Senator Bernie Sanders learns of Iranian strikes live while speaking at rally
United States Senator Bernie Sanders was speaking live at a rally when news broke of American air strikes in Iran. Footage shows Sanders speaking at the rally in Tulsa, Oklahoma, as part of his 'Fight the Oligarchy' tour across the US when news broke of the American attacks at three Iranian nuclear sites . WATCH THE VIDEO ABOVE: Footage shows Bernie Sanders learning of American strikes live on stage. Sanders read Trumps statement live to the audience on Saturday night local time, who began booing and chanting 'no more war'. 'It is so grossly unconstitutional,' he said. 'The only entity that can take this country to war is the US Congress. The president does not have the right.' Trump had moments before announced on his social media platform Truth Social that the US had executed three 'very successful attacks' on the sites at Fordow, Natanz and Esfahan. Sanders has been an outspoken critic of Trump and his political agenda, with the Independent senator of Vermont earlier this month calling the US presiden t a danger to American democracy. 'The American people do not want more war, more death,' Sanders said at the rally. 'It might be a good idea if we concentrate on the problems that exist (in America) than getting involved in another war we do not want.' Trump had only days ago given himself a two-week deadline to decide if US forces will strike Iran. The White House had insisted the delay was to give Iran leadership a chance to negotiate and shut down its nuclear program.
