Markets are braced for a fall in equities and a surge in energy prices after President Donald Trump’s military strikes on Iran’s nuclear facilities (00.50 BST).
US military carried out massive precision attacks on the three key nuclear facilities in the Iranian regime: Fordow, Natanz and Isfahan, prompting immediate retaliation by Iran across northern and central Israel which injured about a dozen civilians.
There were predictions that oil prices could rise above $100 a barrel, with knock-on effects on inflation and energy supplies to the west. It ended the week at $77. Overnight Sunday the price rose to a five-month high of $81.40 before falling back.
Mr Trump said Iran’s nuclear capabilities had been “obliterated” and Tehran must now make peace or face further destructive attacks.
Addressing the nation from the White House, the president said “massive precision strikes” on the three Iranian nuclear sites had been a “spectacular military success”.
The president said Iran’s nuclear facilities — “a horribly destructive enterprise” — were destroyed.
Iran’s foreign minister Abbas Araghchi described the US strikes as “extremely dangerous, lawless and criminal behaviour” and added it “reserves all options” to defend itself.
UK Prime Minister Sir Keir Starmer said the US has taken action to “alleviate” the “grave threat” of Iran’s nuclear programme.
In a statement he said: “Iran’s nuclear programme is a grave threat to international security. Iran can never be allowed to develop a nuclear weapon and the US has taken action to alleviate that threat.
“The situation in the Middle East remains volatile and stability in the region is a priority. We call on Iran to return to the negotiating table and reach a diplomatic solution to end this crisis.”
Israeli prime minister Binyamin Netanyahu praised President Trump and said “the forces of civilisation thank you”.
Mr Trump, he said, had made a “bold decision” that “will change history”. He added: “History will record that President Trump acted to deny the world’s most dangerous regime the world’s most dangerous weapons. His leadership today has created a pivot of history that can help lead the Middle East and beyond to a future of prosperity and peace.”
However, Alexandria Ocasio-Cortez, the US Democratic congresswoman, said Mr Trump should be impeached for launching strikes without congressional approval.
“The president’s disastrous decision to bomb Iran without authorisation is a grave violation of the Constitution and Congressional War Powers,” she wrote on X. “He has impulsively risked launching a war that may ensnare us for generations. It is absolutely and clearly grounds for impeachment.”
UN chief António Guterres called the US move a “dangerous escalation”.
Iran’s allies condemned the attacks. The Venezuelan government said: “This attack is an illegal, unjustifiable and extremely dangerous act of aggression.”
Miguel Díaz-Canel, the president of Cuba, said the bombings were a violation of international law.
Global economists and investors began considering the impact of the strikes on energy and inflation.
Iran and its proxies may decide to close or hinder movement at the Strait of Hormuz, through which 25% of all crude oil passes.
The crisis will benefit top oil producers like Saudi Arabia and Russia. That’s because these countries have been gradually increasing output in the past few months.
Nigel Green, CEO of financial advisory giant deVere Group, said a conflict that had remained largely contained is now threatening to trigger broad-based repricing.
“The US strike on Iran’s nuclear sites is a market-defining moment,” he said. “It’s a direct hit to the assumptions that have been driving investor positioning: lower inflation, falling rates, and stable energy prices. This framework has just been broken.”
Brent crude had already been climbing steadily in recent weeks, but the decision to target Iranian nuclear facilities has dramatically increased fears of retaliation and disruption.
Any closure or threat to the Strait of Hormuz, through which nearly 20% of the world’s oil flows, would send prices sharply higher.
Some analysts now warn that crude could spike toward $130 per barrel, depending on Iran’s next move.
“Such a price shock would filter through to global inflation, which remains elevated and/or sticky in many regions,” said Mr Green.
“Market participants had been pricing in rate cuts from central banks including the Federal Reserve in the second half of the year. That is now in question.”
President Trump’s speech in full:
“Thank you very much. A short time ago, the US military carried out massive precision strikes on the three key nuclear facilities in the Iranian regime: Fordow, Natanz and Isfahan. Everybody heard those names for years as they built this horribly destructive enterprise. Our objective was the destruction of Iran’s nuclear enrichment capacity and a stop to the nuclear threat posed by the world’s number one state sponsor of terror.
“Tonight I can report to the world that the strikes were a spectacular military success. Iran’s key nuclear enrichment facilities have been completely and totally obliterated. Iran, the bully of the Middle East, must now make peace. If they do not, future attacks will be far greater and a lot easier.
“For 40 years Iran has been saying, ‘death to America, death to Israel’. They have been killing our people, blowing off their arms, blowing off their legs with roadside bombs. that was their specialty. We lost over a thousand people. Hundreds of thousands throughout the Middle East and around the world have died as a direct result of their hate.
“In particular, so many were killed by their general Qasem Soleimani. I decided a long time ago that I would not let this happen. It will not continue.
“I want to thank and congratulate Prime Minister Netanyahu. We worked as a team like perhaps no team has ever worked before, and we’ve gone a long way to erasing this horrible threat to Israel.
“I want to thank the Israeli military for the wonderful job they’ve done and, most importantly, I want to congratulate the great American patriots who flew those magnificent machines tonight and all of the United States military on an operation the likes of which the world has not seen in many, many decades.
“Hopefully we will no longer need their services in this capacity. I hope that’s so. I also want to congratulate the chairman of the joint chiefs of staff, General Dan “Razin” Cane — a spectacular general — and all of the brilliant military minds involved in this attack. With all of that being said this cannot continue.
“There will be either peace or there will be tragedy for Iran far greater than we have witnessed over the last eight days. Remember, there are many targets left. Tonight’s was the most difficult of them all by far and perhaps the most lethal. But if peace does not come quickly, we will go after those other targets with precision speed and skill.
“Most of them can be taken out in a matter of minutes. There’s no military in the world that could have done what we did tonight. Not even close. There’s never been a military that could do what took place just a little while ago. Tomorrow General Cane and Secretary of Defence Pete Hegseth will have a press conference at 8am [1pm UK time] at the Pentagon.
“I want to just thank everybody and in particular God. I want to just say we love you God and we love our great military. Protect them. God bless the Middle East. God bless Israel and God bless America. Thank you very much.”
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