Commodities Rally Sharply as Middle East Tension Escalate

Markets were roiled overnight as geopolitical risk surged following Israel’s large-scale military operation against Iran. The strikes—which targeted Iran’s nuclear infrastructure, top military personnels, and nuclear scientists—marked a significant escalation in Middle East tension and triggered a surge in safe-haven assets and energy prices.

Israel Launches Strikes on Iran’s Nuclear & Missile Sites

On Thursday night, Israel launched coordinated strikes across Iran, bombing nuclear and missile facilities and conducting covert operations against air defense systems. Multiple high-ranking Iranian military officials and nuclear scientists were reported killed, including IRGC commander Gen. Hossein Salami.

The operation, confirmed by Israeli officials as a pre-emptive strike, was conducted without direct U.S. support. In fact, President Trump publicly opposed the strikes, emphasizing that a nuclear deal with Iran was still achievable.

U.S. Secretary of State Marco Rubio said: “Tonight, Israel took unilateral action against Iran. We are not involved in strikes against Iran and our top priority is protecting American forces in the region.”

Both Iran and Israel are now on high alert, with airspace closures, evacuation of diplomats, and full military preparedness across the region.

Market Reaction: Commodities Surge, Risk Appetite Sours

Oil and gold prices surged as traders rapidly priced in the risk of broader regional conflict and potential disruption in oil supply routes such as the Strait of Hormuz, which carries over 20% of global crude flows.

• WTI crude jumped to a new 4-month high above $75, extending a sharp rebound from recent lows.
• Brent crude rose above the key $79 per barrel mark, nearing $80.
• Gold (XAUUSD) rebounded strongly above $3,400 as safe-haven demand accelerated.
• USDJPY extending it downside below 145.00, traded at 143 as of this writing.

Investors Guidance: Risk Aversions are Back?

This escalation has reintroduced geopolitical risk aversion into oil and gold, and traders are pricing in for potential wider conflict. Investors should remain cautious of further developments:

• Iran’s retaliation could come in the form of missile or drone strikes against U.S. or Israeli’s bases
• Energy markets will likely see elevated volatility until clarity emerges.
• Safe-haven bias may strengthen further if the U.S. is dragged into the conflict or if regional allies respond militarily.

Technical Outlook for Oil

UKOUSD, Day Chart Analysis | Source: Ultima Market MT5

Brent crude oil has surged sharply, breaking out of a symmetrical triangle pattern and decisively clearing the key psychological resistance at $70.00 amid intensifying Middle East tensions.

Price action has broken above the triangle and the $70 marks as this bullish move coincides with a strong surge in geopolitical risk. Brent oil is expected to remain volatile and tilted higher as long as geopolitical tensions persist and the $70 support holds.

USOUSD, Day Chart Analysis | Source: Ultima Market MT5

Meanwhile the WTI also staged a strong reversal, surging past multi resistance level. Price has broken through the $66.00 key level and has now surged above $72.5, a key prior high from March.

The price broke out from a prolonged consolidation range between $66.00 and $72.75, and strong move from its multi-year low below $66 suggest that further upside is likely if conflict risks persist.

Despite the sharp upside breakout and the strong technical reversal signals, investors should exercise caution. This surge is largely driven by sudden geopolitical developments, and it remains uncertain whether the rally can be sustained if the situation in the Middle East stabilizes or de-escalates in the coming days.

Though, technically, we are seeing signs of a strong bullish reversal in oil.

Disclaimer

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