Tensions in the Middle East escalated sharply over the weekend after former U.S. President Donald Trump confirmed that American forces carried out coordinated airstrikes on three key Iranian nuclear facilities.
In a televised statement, Trump said the sites in Fordow, Natanz, and Isfahan had been “totally obliterated,” describing the operation as a decisive step to neutralize Iran’s nuclear capabilities. “We dropped a payload of bombs directly on Fordow, deep underground,” Trump added. “Those sites are destroyed.”
Iran, through its semi-official Tasnim News Agency, rejected the claims and accused the U.S. of an act of war. The Iranian Armed Forces warned that the strikes have “expanded the scope of legitimate targets” and that Washington should expect “severe consequences.”
The International Atomic Energy Agency (IAEA) said it had not detected any release of radioactive material, further casting doubt on the scale of damage suggested by Trump.
Independent satellite imagery from the Fordow facility released Monday morning showed minimal surface disruption, raising questions about the effectiveness of the operation.
Despite the rhetoric, initial market reaction was contained. The Stoxx Europe 600 index declined 0.4% in early trading, while U.S. futures remained largely flat.
Brent crude oil rose as much as 5.7% during Asian hours but pulled back to a gain of less than 1% as trading progressed.
“The geopolitical escalation is significant, but markets have been pricing in heightened risk since the initial Israeli-Iran exchange earlier this month,” said Farah Decker, global macro strategist at Rymark Holdings. “Fund managers have already reduced risk exposure and increased hedging activity, which may limit immediate downside.”
The MSCI All Country World Index has declined 1.5% since June 13, when Israel carried out a strike on Iranian military targets. Analysts say further movement will depend heavily on Iran’s next step.
While threats of retaliation have intensified, no concrete military response has been confirmed.
Meanwhile, regional energy supply risks remain in focus. Nearly 90% of Middle Eastern oil exports pass through the Strait of Hormuz, a key chokepoint now under elevated geopolitical risk.
Asian economies, particularly China, which sources 14% of its crude from Iran, are expected to monitor developments closely.
In response to the rising threat level, major Japanese financial institutions, including Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group, have begun evacuating staff from the Gulf region.
While Trump has framed the operation as a deterrent against further nuclear escalation, Tehran’s response in the coming hours and days will determine whether the situation stabilizes or shifts into prolonged conflict.
