On June 13, 2025, Israel was their first responders to beat back a mass drone attack. Iran reportedly unleashed more than 100 drones in attacks deep into Israeli territory. The Israeli government had described its military response as “preemptive strikes” against critical Iranian nuclear and military facilities. This increase in violence has dramatically raised political temperature in the region, with severe repercussions felt all over the world—including in global markets.
The drone attack from Iran was a watershed moment in Middle Eastern relations and forced Israel to respond with the harshest of measures. The preemptive strikes on critical infrastructure highlighted the Israeli government’s resolve to do whatever necessary to protect the citizens of the Israeli state. Footage from Tehran documents the horrifying impact of the deadly attacks. Scattered debris from an apartment complex lays inundating the streets and landing on parked vehicles due to the explosion caused by air strikes—a direct result of military intervention.
This military and geopolitical confrontation, in turn, has exacerbated the impacts that the two nations’ military engagement has had on financial markets worldwide. The immediate response from investors was to send oil prices soaring, with crude climbing 13% within hours. Analysts suggest that this spike in oil prices may reignite inflationary pressures in both the U.S. and the broader global economy. Higher oil prices might mean higher transportation and production costs, making an already complicated economic recovery all the more difficult.
Asian stock markets opened sharply lower due to the major outbreak of conflict and increasing risk aversion among investors. At the same time, many market participants remain concerned that protracted military conflicts might aggravate the already shaky economy. This worry has created an equity sell-off across the region.
The fate of this proposal is very much in the air, with countries around the world watching developments with great interest. Undoubtedly there will be an increase in diplomatic track two efforts to try and reduce tensions and stop any further violence. The international community is justifiably alarmed at the prospect of a bloody, drawn-out military conflict. Yet such a conflict would not only rock oil supply chains, heightening today’s economic turmoil.