Iran and Israel Exchange Strikes, Sending Oil Prices Higher and Markets Lower

TEHRAN/TEL AVIV (AP) — Iran and Israel exchanged military strikes for the first time since an April ceasefire, escalating tensions in the Middle East and triggering a sharp sell-off in global markets on Sunday.

The conflict, which began early Sunday morning, marked the start of what Iranian officials described as a planned week of retaliatory operations. Iranian forces launched the initial attacks, targeting military sites within Israel. In response, Israeli air forces struck back, hitting military infrastructure inside Iranian territory. The exchange represents the most significant direct military engagement between the two nations since the temporary truce was established in April.

The immediate economic fallout was severe. Brent crude oil futures jumped more than 4% in early trading, reflecting investor fears that the renewed hostilities could disrupt energy supplies in the volatile region. Asian stock markets followed suit, with major indices in Tokyo, Seoul, and Shanghai posting significant losses as risk aversion spread across financial centers.

Israeli officials confirmed the retaliation, stating that the strikes were targeted at specific military assets to degrade Iran's capabilities. Tehran characterized the initial wave of attacks as a necessary response to prior provocations, framing the operations as the opening phase of a broader campaign. Both sides have indicated that further military actions are possible as the situation develops.

The escalation comes after months of relative calm following the April agreement, which had temporarily halted direct fire between the two adversaries. Security analysts note that the breakdown of the ceasefire raises concerns about a wider regional conflict involving proxy forces and other state actors. Diplomatic channels remain active, with international mediators urging restraint to prevent a broader war.

No immediate casualties were reported from the initial exchanges, though both nations have mobilized additional defense resources. Air defense systems were activated across the region as the strikes continued. The United Nations and several major powers have called for an immediate de-escalation, warning that the stability of the Middle East is at risk.

As of Sunday morning, the full scope of the damage from the strikes remains unclear. Questions persist regarding the long-term viability of the ceasefire and whether diplomatic efforts can prevent further military engagement. The coming hours will be critical in determining whether the violence remains contained or expands into a sustained conflict.

Investors and policymakers are closely monitoring the situation, with energy markets expected to remain volatile. The potential for further strikes looms as both nations assess the impact of the initial attacks. The international community awaits clarification on the next steps from Tehran and Jerusalem.