Oil prices surged more than 12 percent Friday after Israel launched “preemptive” strikes on Iranian nuclear and military sites, raising fears of a broader Middle East conflict. Stocks fell as investors sought safer assets amid escalating tensions.

US President Donald Trump said a “massive conflict” in the region was possible, while Tehran warned Israel faces a “bitter and painful” fate.

Israeli Prime Minister Benjamin Netanyahu said in a video statement, “This operation will continue for as many days as it takes to remove this threat.

“We struck at the heart of Iran's nuclear enrichment programme. We targeted Iran's main enrichment facility at Natanz. We also struck at the heart of Iran's ballistic missile programme,” he added, saying nuclear scientists “working on the Iranian bomb” were also targeted.

Iran’s supreme leader Ayatollah Ali Khamenei responded, stating: “With this crime, the Zionist regime has set itself for a bitter and painful fate and it will definitely receive it.”

Israeli Defence Minister Israel Katz warned, “a missile and drone attack against the State of Israel and its civilian population is expected in the immediate future.”

Trump previously said an Israeli strike could be imminent: “I don't want to say imminent, but it looks like it's something that could very well happen.” He added a “pretty good” deal on Iran’s nuclear program was “fairly close,” but an attack could derail negotiations.

A US official confirmed no American involvement in the strikes, though concerns remain the US could be drawn into the conflict after Iran threatened to target US bases if war breaks out.

Oil contracts hit levels not seen since January amid supply worries. Asian stocks fell sharply, bonds rose, and gold surged above $3,400 an ounce. US and European futures dropped.

“The Middle East powder keg just blew the lid off global markets,” said Stephen Innes of SPI Asset Management. “Equity futures are plummeting. Bond yields are sinking. Gold and oil are skyrocketing.

“Brent crude futures are racing toward the mid-$70s range — but if the Strait of Hormuz, which accounts for 20 percent of global oil flows, finds itself in the blast radius, you can add another $15 to the bid.

“If Iran holds back, we get a relief bounce. But if missiles start raining down on Tel Aviv or Tehran retaliates with real teeth, we're staring down a scenario that could redefine the macro narrative for the rest of 2025.”

JPMorgan Chase warned this week oil prices could top $130 in a worst-case scenario.

Markets were already fragile after Trump renewed threats to impose unilateral tariffs on US trade partners, signaling a return to previous trade tensions.