Please see below, todays Daily Investment Bulletin from Brooks Macdonald covering their thoughts on the overnight events in the Middle East:
What has happened
Markets have been rocked overnight by fresh Middle East geopolitical risk, with Israel launching air strikes on Iran’s nuclear and ballistic missile programme sites, and warning of more action to follow. Iran has already retaliated, sending drones into Israel and vowing further reprisals. With renewed fears of Middle East conflict emerging earlier this week alongside risks of a wider Middle East conflict, that has pushed the oil price higher – at one point overnight Brent crude US dollar oil prices were up around +13%, peaking at US$78.50 per barrel – for context, that marked a gain of around +20% from where prices were at the start of June at under $65 per barrel – at the current time, the Brent crude oil price has pulled back some of its latest move, and is currently trading up at around US$73 per barrel, up around +5% on the day.
Israel’s strike on Iran
As we said in our Daily Investment Bulletin only yesterday, with US President Trump growing less confident around the prospects of limiting Iran’s nuclear programme through talks, reading between the lines it suggested a higher risk of military action instead. The US overnight has claimed that Israel acted without US involvement or assistance – however, according to Israeli public broadcasts, Israeli officials notified the US before beginning the strikes. The United Nations atomic watchdog (the International Atomic Energy Agency) has said there are no signs of increased radiation at Iran’s main nuclear enrichment site, Natanz in central Iran – while there are reports that a number of Iran’s high-ranking military officials and nuclear scientists have been killed.
Market reaction
Unsurprisingly, markets are reacting in a risk-off move this morning, with equity markets lower, and safe havens, including US Treasuries, the US dollar currency and gold prices all higher earlier. For the UK FTSE100 equity index, the falls this morning appear to be limited, largely due to gains in oil major heavyweight stocks BP and Shell this morning following the higher oil price moves overnight. Prior to the events overnight out of the Middle East, yesterday had seen equity markets put in a solid session, with US equity indices up on the back of a weaker-than-expected US Producer Price Index (PPI) inflation report, echoing the weaker US Consumer Price Index (CPI) inflation data the previous day.
What does Brooks Macdonald think
Keep the latest oil price moves in context. Back in January, Brent crude oil prices were even higher, at over US$82 per barrel at one point mid-January. So far this year, for the most part, oil prices have been in a downward price-channel, as markets have reacted to increased oil supply from OPEC+ (Organization of the Petroleum Exporting Countries plus non-OPEC members including Russia), who have been continuing to reduce post COVID pandemic supply curbs, alongside broader economic growth concerns amid global trade tariff uncertainty. If history is a guide, conflict-driven higher oil prices usually subside as wider economic and supply/demand fundamentals reassert themselves – nonetheless, there will likely be unwelcome oil price volatility in the interim.
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Andrew Lloyd
13th June 2025