[b]Date: 13th June 2025.[/b]
[b]Israel Attacks Iran in An Overnight Strike: Oil Rises 13%![/b]
Israel launched attacks on Iran's nuclear facilities, military leadership and key Iranian scientists according to reports. The attack took place overnight and involved more than 200 Israeli fighter jets which bombed more than 100 targets. The US has made a statement publicly advising the country was not involved. In addition to this, other key partners such as the UK and France are pushing for de-escalation. How is the market reacting so far?
Crude Oil Prices Jump 13%
The asset which is seeing the most volatility is understandably Crude Oil as Iran is the 7th highest producer of Crude Oil after Iraq. Currently, the price of Crude Oil is trading 5.00% higher, but earlier in the day it was 13% higher. Crude Oil rose to a high of $77.64 per barrel and to its highest price since January.
Due to extremely high volatility in a short period, it is understandable that the asset became oversold triggering a decline in the past 3 hours. Currently, the bearish momentum continues to remain the driving force in the short term. The 200-period SMA continues to act as a trend-line meaning the price may continue to decline to $70.50 before finding support. However, this would also depend on the upcoming developments.
According to reports, the Israeli army not only attacked nuclear facilities, military leadership and key Iranian scientists, but also the country’s ability to instantly retaliate. As a result, Iran was limited to using drones to retaliate. According to army experts, drones can travel long distances and cause significant damage, but they travel extremely slowly. The Israeli government is advising they are currently shooting down drones over Jordan and Syria.
Crude Oil Daily Chart
If the conflict was to escalate, the price of Oil could regain bullish momentum as it would trigger a fear of supply chain disruptions and lower production levels.
SNP500 - Developments Trigger Low Risk Appetite!
The SNP500 fell as much as 1.98% before retracing higher. Currently, the SNP500 is trading 1.20% lower and the NASDAQ 1.33%. The downward price movement is being triggered by 2 factors. The first is the conflict between Israel and Iran prompting a lower risk appetite. The second is the significantly higher oil prices which can apply upward pressure on inflation.
The future price movements of the SNP500 and stock market in general will depend on how the current situation escalates. If the two countries escalate, the price of Oil may continue to rise while the stock market potentially could take a larger hit. If downward pressure increases, a key support level for the index could be seen at $5,791.24. This level may act as a target for individuals looking to speculate downward momentum in the medium-term.
Traders should note that even though the index is yet to witness significant lasting volatility, most risk indicators point to a ‘risk off’ sentiment. For example, the VIX Index currently trades 9% higher.
Gold - Safe Haven Asset Witness Increased Demand!
The price of Gold has not only risen due to the Israeli strikes on Iran, but has been increasing in value for 3 consecutive days. Originally, lower inflation data drove the upward price movement, prompting a weaker US Dollar. Gold is inversely correlated with the US Dollar. However, now the commodity’s safe haven status is coming into play as institutions look to lower the risk of their portfolios.
Key Takeaway Points:
Oil prices spiked 13% due to the Israeli strikes, reaching $77.64, with potential decline to $70.50 if bearish momentum continues.
The SNP500 fell 1.98% as the conflict escalated, and rising oil prices raised inflation concerns.
Gold has been increasing for the last three days, driven by the weaker US Dollar and its safe-haven appeal amid the crisis.
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[b]Please note that times displayed based on local time zone and are from time of writing this report.[/b]
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[b]Michalis Efthymiou
HFMarkets[/b]
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