Oil Prices Surge Amid Escalating Tensions Between Israel and Iran

Future contracts for oil jumped as markets reopened on Sunday night (June 15, 2025), building on last week’s increase (+7%) following an attack on Iranian energy installations over the weekend. This development has heightened fears of potential supply disruptions in the Middle East. Beyond oil, Asian stocks rose today (June 16, 2025) as investors shifted focus to local news after a weekend dominated by escalating conflict between Israel and Iran. Positive economic data from Japan and mainland China helped boost hesitant markets across the region following a mixed start in early trades. The Nikkei 225 index climbed by 1%, while the Hang Seng China Enterprises Index reversed early losses. Futures for U.S. stocks also rose, and a dollar index strengthened. Analysts noted that it is too early to assess how Asian markets will fully address this rapidly evolving conflict, which remains critical to regional energy security. Stocks fell on Friday as investors reacted to reports of Israeli airstrikes against Iran, with concerns growing over prolonged oil supply interruptions that could weigh on the global economy and potentially fuel inflation cycles amid central banks’ easing policies. Brent crude initially surged up to 5.5% before trimming most of its gains. Yields on government bonds rose across most major maturities, with the 10-year yield climbing two basis points to 4.42%. Japanese shares were supported by yen weakness, benefiting firms with overseas earnings, alongside a rally in defense sector companies following reports of upcoming EU-Japan defense cooperation talks. Despite positive retail sales data from China showing a faster-than-expected 6.4% May increase, market volatility is expected to persist as the conflict escalates and investors brace for a busy week of central bank meetings, including decisions from the Federal Reserve and the Bank of Japan.