Global financial markets were rattled on Tuesday as Israel issued an unprecedented evacuation order for over 300,000 residents in Tehran, intensifying fears of a wider military conflict in the Middle East. The evacuation zone includes critical infrastructure such as Iran’s state broadcasting headquarters, police command centers, and hospitals — one of which is affiliated with the powerful Revolutionary Guard.
Following the warning, oil prices surged over a dollar per barrel, with U.S. crude climbing to $72.82 and international benchmark Brent crude rising to $74.34. The spike reflects deepening investor concern that a full-scale war could threaten oil supplies from the region, sending fuel prices soaring worldwide.
Meanwhile, equity markets reacted sharply to the escalating tensions. U.S. futures declined, with both the S&P 500 and Dow Jones Industrial Average down 0.6% in pre-market trading. European indexes mirrored the gloom: Germany’s DAX plunged 1.3%, France’s CAC 40 fell 0.9%, and London’s FTSE 100 lost 0.5%.
In Asia, market sentiment was mixed. Japan’s Nikkei 225 edged up 0.6% after the Bank of Japan opted to hold interest rates steady, signaling caution in the face of external shocks and internal economic fragility. However, Chinese and Hong Kong markets dipped slightly, and other regional exchanges, including Australia and South Korea, posted minor gains or remained flat.
The abrupt escalation in the Middle East marked by aggressive exchanges between Israeli and Iranian forces has pushed geopolitical risk to the forefront for investors already grappling with trade tensions, interest rate uncertainty, and a fragile global economy.
President Donald Trump’s early departure from the G7 summit to return to Washington further underscored the seriousness of the situation. The evacuation order from Israel is seen as a potential prelude to expanded military action targeting Iranian assets in the capital.
The conflict’s potential to disrupt oil flows from one of the world’s key producers has brought back memories of past crises that triggered volatility in energy markets. Analysts warn that while such spikes are often short-lived, prolonged hostilities could keep oil prices elevated, straining global supply chains and consumer wallets.
Gold, often viewed as a safe haven during periods of turmoil, saw prices decline slightly after a surge earlier in the week. An ounce of gold dropped to $3,398.70 after Friday’s jump, as some investors took profits amid fluctuating sentiment.
