- Oil prices jump and stocks sink on reports of escalating Middle East tensions.
- Israel struck Iran early Friday morning, multiple agencies reported, citing US officials.
- Potential wider conflict in oil-rich Middle East could disrupt energy supplies.
Oil prices jumped while stocks sold off after reports of an escalation in Middle East tensions.
Israel struck a site in Iran early Friday morning, multiple outlets reported, citing US officials.
International benchmark Brent crude oil futures rose as much as 4.2% before trading 2.8% higher at $89.54 a barrel at 11:15 p.m. EDT. US West Texas Intermediate futures were 3.2% higher at $85.40 a barrel.
The strike on Friday came days after Iran attacked Israel on Saturday with a barrage of more than 300 missiles and drones. On April 1, Iran's embassy in Damascus, Syria, was hit with a strike. Israel didn't claim responsibility for the strike, but Iran held it accountable and vowed retaliation.
Earlier this week, Israel pledged retaliation over Iran's missile and drone attack. Oil markets shrugged off Iran's attack on Israel as the market assessed the conflict would remain contained. Friday's reports changed this.
Markets have been on edge over fears of a widening of the conflict in the Middle East — a major oil-producing region. A broader conflict could disrupt energy supplies, which could impact the global economy.
If the reports turn out to be true, "fears over further escalation will only grow, as well as concerns that we are potentially moving closer towards a situation where oil supply risks lead to actual supply disruptions," ING commodity strategists wrote on Friday.
"It's a shoot first and ask questions later dynamic for investors. This is Israel's 'tat' to Iran's 'tit,' and the fear is that this tit-for-tat situation could spiral further out of control," Kyle Rodda, a senior market analyst at Capital.com, an online trading platform, told Business Insider.
"Iran seems to be downplaying the attack for now, which says to me that it does not wish to inflame the situation further and create conditions in which it will be forced to retaliate with equal or greater force," Rodda said.
"However, the event is fresh and fluid, so uncertainty prevails," he added.
Stock markets are also selling off on the news while the price of gold, a safe haven, rose to near a record high.
US stock futures fell, with S&P500 down 1.3%.
Japan's Nikkei 225 index was 3.5% lower at 11:16 a.m. local time.
The spot gold price was 1.2% higher at $2,406.92 an ounce.
