Israel-Iran Conflict: Markets Navigate Escalating Military Actions

Published At: June 20, 2025 by Rachel Tan

Conflict Status Update

The Israel-Iran conflict has intensified significantly as it enters its seventh day, following Israel's initial strikes on June 13. Recent developments have marked a dangerous escalation in both conventional and cyber warfare capabilities. On June 17, Israel conducted coordinated strikes that eliminated IRGC General Ali Shadmani while simultaneously disrupting Iranian banking systems, demonstrating sophisticated multi-domain operational capabilities.

The conflict reached a critical juncture on June 19 when Israel deployed 40 aircraft to target Iran's "inactive nuclear reactor" in Arak and nuclear-linked facilities near Natanz. Iran's immediate retaliation included missile strikes that hit Soroka Hospital in Beersheba, representing a concerning escalation in targeting civilian infrastructure. Current casualty figures show conflicting reports, with Iran acknowledging at least 80 fatalities including 20 children and over 800 injured, though some publicly available sources suggest higher tolls. Israeli casualties include hundreds of wounded from recent missile strikes.

The United States has deployed additional F-16, F-22, and F-35 jets in a defensive posture, with President Trump announcing a decision on direct U.S. involvement within "two weeks." Diplomatic efforts remain stalled as Iran refuses U.S. negotiations until "retaliation against Israel is complete," though European-mediated talks in Geneva are planned despite minimal Iran-U.S. trust.

Energy Markets Analysis

Oil markets have demonstrated remarkable volatility with WTI crude trading at $72.53 per barrel as of June 16, while Brent crude reached $76.99 per barrel on June 19. Technical analysis suggests Brent is testing $73.55 support levels before potentially rising toward $85.05, indicating substantial upward pressure on global energy prices.

The conflict has severely impacted critical energy infrastructure on both sides. Iran's South Pars gas field, which accounts for 80% of the nation's gas output and represents the world's largest gas field, has partially halted operations following Israeli strikes. Simultaneously, Israel's Leviathan and Karish gas fields have been forced to close, cutting approximately two-thirds of Israel's domestic gas supply.

The Strait of Hormuz remains the paramount concern for global energy markets, with 20 million barrels per day of oil transit at risk. While no direct attacks have occurred yet, electronic navigation disruptions have been reported, and shipping rates have surged 20-40% for Asian routes. Qatar's LNG exports, representing 20% of global demand, remain vulnerable to potential Hormuz disruptions.

Regional fuel markets are experiencing upward pressure across Asia-Pacific economies heavily dependent on Middle Eastern energy imports, with several countries implementing price adjustments in response to supply chain stress. Market analysts warn that a complete Hormuz blockade could spike oil prices above $100 per barrel, creating significant inflationary pressures across Asia-Pacific economies heavily dependent on Middle Eastern energy imports.