Key facts
- The US conducted "powerful strikes" on Iran overnight.
- Iran vowed a "crushing response" and claimed to have hit US military sites.
- The conflict has caused oil prices to surge.
- Brent crude rose to $76 per barrel.
- A Middle East peace deal has broken down.
Global markets are anticipating a shift towards risk aversion following overnight strikes exchanged between the US and Iran, which occurred after the collapse of a Middle East peace deal. The US initiated "a series of powerful strikes" late Monday, with Central Command stating the actions were a response to Iran targeting commercial shipping in international waters. Iran has vowed a "crushing response," and missile alert sirens were reportedly sounded in Bahrain. The Islamic Revolutionary Guard Corps claimed to have struck 85 US military sites in Bahrain and Kuwait. This escalation marks the breakdown of a fragile ceasefire that was set to expire in August, following weeks of negotiations on contentious issues including Iran's nuclear program and control of the Strait of Hormuz. Further explosions were reported on Qeshm and Kharg Islands, the latter hosting Iran's primary oil terminal in the Persian Gulf. The renewed conflict has driven up oil prices, with Brent crude, the international benchmark, jumping to $76 per barrel from $72.