Live updates: Follow the latest news on US-Iran war
Israel has launched a new wave of strikes on Iran, risking escalation in a war that has already roiled global markets and stoked fears of rising inflation.
The strikes reported in Tehran and other parts of the country came shortly after US President Donald Trump said he told Israel to stop attacking energy infrastructure.
Oil and gas prices soared after Wednesday's Israeli strike on Iran’s South Pars gasfield, part of the world’s largest natural gas reserve.
Mr Trump publicly urged restraint, saying he told Israeli Prime Minister Benjamin Netanyahu not to repeat such actions.
“I told him, 'don't do that'. And he won't do that,” Mr Trump said at a White House briefing on Thursday.
Mr Netanyahu later confirmed that Israel would “hold off” attacks on Iranian gasfields at Mr Trump's request.
Nevertheless, the conflict appears to be entering a more volatile phase. The latest Israeli strikes do not appear to have directly targeted energy sites, but the risk of further escalation remains high.
Tehran has warned that it will show “zero restraint” if its energy infrastructure is hit again. Despite calls on Iran to halt its attacks, Kuwait's state oil firm, KPC, said on Friday its oil refinery has been hit by multiple drone strikes.
The crisis has already sent shock waves through global energy markets. Oil and gas prices, which surged earlier in the week after attacks on Gulf infrastructure, eased slightly on Friday morning but remain elevated, while equities have come under pressure amid concerns over supply disruptions and inflation.
Analysts warn that the combination of geopolitical instability and higher energy costs could feed into broader inflation, complicating monetary policy for central banks already grappling with fragile economic conditions.
The Israeli strike on South Pars marked a turning point in the conflict. It triggered retaliatory strikes by Iran on energy facilities across the Gulf, including major liquefied natural gas infrastructure.
Brent crude slipped by more than $1 to about $107 a barrel and US West Texas Intermediate fell to $93.48 at 10.00a UAE time, as traders assessed efforts by Washington and its allies to boost supply and secure shipping through the Strait of Hormuz, a vital route for roughly a fifth of global oil and gas flows.
The pullback followed a sharp rally earlier in the week, when prices surged to multiyear highs, briefly approaching $119 a barrel after Iran struck energy infrastructure across the Gulf.
Mr Netanyahu has previously said Israel acted independently in striking Iranian energy assets and has maintained that Tehran’s nuclear capabilities have been significantly degraded, a claim disputed by international inspectors.
The widening conflict has spread across the region, amplifying concerns about a broader economic consequences.
For global markets, the immediate concern is not only supply disruption but also the persistence of uncertainty. Even as prices edged lower at the end of the week, volatility remains elevated and sentiment fragile.
Energy economists warn that sustained instability could push oil prices significantly higher again, while also driving up shipping and insurance costs. These are factors that would feed directly into consumer prices worldwide.
The war, now in its third week, has severely strained regional energy systems and raised concerns about the security of supply chains, particularly as Iran has demonstrated its ability to threaten infrastructure and shipping routes.
Markets have been especially sensitive to developments around the Strait of Hormuz, where tanker traffic has been disrupted and producers have been forced to cut output, pushing crude above $100 a barrel and fuelling expectations of sustained volatility.
Equity markets reflected the uncertainty. Wall Street fell sharply on Thursday, with the Dow Jones Industrial Average dropping more than 300 points, the S&P 500 losing nearly 1% and the Nasdaq declining over 1%, as rising oil prices stoked concerns about inflation and interest rates.
