Iran-Israel war: World markets shaken by escalating tensions

U.S. stock markets experienced a sharp decline on Friday, June 13, 2025, driven by heightened geopolitical tensions in the Middle East following military exchanges between Israel and Iran. The Dow Jones Industrial Average fell by approximately 770 points, or 1.79%, reflecting investor unease as oil prices surged and risk assets faced heavy selling pressure.

Economic and Political Context

The market turmoil comes amid heightened global economic uncertainty, exacerbated by U.S. President Donald Trump’s unpredictable trade policies. Trump urged Iran to negotiate a deal over its nuclear program to avoid further escalation, posting on Truth Social early Friday. Analysts noted that rising oil prices could undermine Trump’s efforts to lower energy costs, potentially reversing recent declines in U.S. gasoline prices that had helped curb inflation.

Charu Chanana, chief investment strategist at Saxo, described the escalation as adding “another layer of uncertainty to already fragile sentiment,” predicting continued upward pressure on oil and safe-haven assets if tensions persist. However, some experts suggested that a swift de-escalation could allow markets to recover some losses.