Picture by יחס הזהב / Wikimedia
On Monday (16/06/2025), U.S. President Donald Trump attending the G7 Summit in Canada, responded to a question by the press regarding the Iran-Israel Conflict: “A deal will be signed and I think Iran is foolish not to sign one.”
Now, as per Tuesday, Iran has not yet signed the “deal” that Trump previously referred. President Trump went as far as to urge “everyone” to evacuate Tehran, Iran’s capital.
The Conflict’s Background
Convinced that Iran is days away to developing its nuclear program, Israel on 13 June 2025 targeted several Iranian nuclear sites, military leaders, and military bases to set back Iran’s nuclear development progress.
Markets reacted instantly to Israel’s “Operation Rising Lion”, global benchmarks for commodities experienced a significant surge. The U.S benchmark for Crude Oil, West Texas Intermediate or WTI, climbed to as high as $72 per barrel and the worldwide benchmark for crude oil, Brent, surging to $73 per barrel.
On the other hand, global indices experienced a slump due to an increasingly tense geopolitical landscape.
Contradictory to current bearish market sentiment, Israeli Ministry of Finance Chief Economist Shmuel Abramzon is optimistic that this conflict will end in the near future. Moreover, he emphasized Israel’s baseline scenario: this conflict will be ended in the near future.
In light of the seemingly shifting landscape, Goldman Sachs Managing Director Nikhil Bhandari mentioned recently on Bloomberg that Goldman is expecting a surplus building up in the oil market, regardless of the risks of geopolitical premiums. He even forecasted Brent to calm down to $60 a barrel by the end of 2025.
Overall Conclusion and What to Look Ahead
Israel’s sudden operation against Iran goes to show how sudden markets can shift. Dealing directly with nuclear weapons, this conflict definitely increases the potential risk for an all-out war. Looking ahead, we need to be aware of the responses of Iran especially to whether they sign the “deal” Trump previously referred to. More than that, this week is full of high-impact announcements such as today’s Bank of Japan interest rate decision and the upcoming Retail Sales data, Jobless Claims data, FOMC Meeting, and of course the FED’s Interest Rate Decision.
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