Crude oil prices jumped and U.S. stock futures sank Thursday night following reports of explosions in a city in western Iran, amid fears of a wider conflict between Israel and Iran.
West Texas Intermediate crude for May delivery at one point jumped more than 4%, while June Brent crude the international benchmark, surged toward $90 a barrel.
U.S. stock-index futures sank, with Dow Jones Industrial Average futures down more than 300 points, and S&P 500 futures and Nasdaq-100 futures each off more than 1%.
The price of gold rose as much as 1%, before falling back to a gain of 0.3%, to $2,405 an ounce.
The Associated Press reported commercial flights had diverted routes early Friday morning, local time, over western Iran, and commercial flights in Tehran were grounded. The semi-official Fars and Tasnim news agencies claimed there had been “explosions” heard over the city of Isfahan, where Iran has a major airbase and nuclear facilities.
CBS News reported Israeli missiles had struck targets in Iran, citing two U.S. officials. There were also unconfirmed reports of explosions in Iraq and Syria, home to Iran-backed militias.
Such a move could further inflame tensions in the Middle East, and risk an all-out war between Iran and Israel.
Stephen Innes, managing partner at SPI Asset Management, wrote Thursday night that reports of the apparent attack “have sparked a significant shift out of risk assets and into safe-haven investments.”
If the reports are accurate, “clearly, Israel is paying little heed to U.S. de-escalation demand, and now the fear of escalation spiralling out of control grips risk markets,” he wrote.
Already elevated by fighting in Gaza, Middle East tensions have been even higher in the past couple of weeks following an apparent Israeli airstrike on Iran’s embassy compound in Damascus, Syria, which Iran said killed two generals. Iran retaliated last weekend with a barrage of more than 300 missiles and drones launched from its home soil against Israel. The vast majority were shot down by Israel and its allies, including the U.S., and damage and casualties were limited.
Earlier this week, President Joe Biden urged restraint after the attack, hoping to resolve tensions through diplomatic means.
