Israel vs Iran: The conflict nobody expected and it’s impact on markets

Josh Groves

14th June 2025

Written by Josh Groves

In 2022, the world held its breath as Russia mounted a full-scale attack on Ukraine, a war still going on today. Now, its 2025, and rather than have 1 less war to worry about, there is 1 more. But how problematic is this conflict, and what does it mean for the rest of us?

Tensions in the Middle East has been raging for quite some time now. For the last few months, the focus has been on Gaza, and the increasingly offensive stance that Israel has had. Now, our attention has turned to Iran, who have found themselves in the heat of the fight. A somewhat surprising attack on an Iranian uranium enrichment facility has led to days of exchanged missiles between the two countries.

The gravest concern for us all is the threat of nuclear weapons deployment. And yes, unfortunately, this is a plausible outcome. After all, Israel carrying out the attack on Iranian nuclear facilities must mean that they had sufficient intelligence that Iran was close to producing a nuclear weapon. The International Atomic Energy Agency also stated that ‘Iran had amassed enough uranium enriched up to 60% purity - a short, technical step away from weapons grade, or 90% - to potentially make nine nuclear bombs’.

Even assuming a best-case scenario in which no nuclear weapons are used, and the conflict remains contained (i.e. no US involvement), the impact on markets has already been profound.

Bent Crude, the international oil benchmark, has risen by around 7% since the fighting started. The middle east accounts for a third of the world’s oil production3, and people are justifiably worried that the conflict may result in reduced oil supply.

UK chancellor Rachel Reeves called spiking energy prices and trade route threats a ‘cause for concern’ ,likely igniting inflation. Gold, considered a ‘safe asset’ during times of economic uncertainty, has hit record highs, whilst global equities have seen further waves of volatility.

If one thing is certain, it's that Donald Trump’s tariffs and now an escalated middle eastern war are at the centre of an investor's worst nightmare, uncertainty.