In a significant upheaval, oil prices soared over 10% following reports of Israel's military actions against Iran, reaching their highest levels since January. The price of the benchmark Brent crude climbed to approximately $74.47 a barrel, although it later receded to a 5% increase from the previous day's close. Investors remain uneasy, realizing that any further escalation could severely impact oil supplies from one of the world's richest energy regions.

Despite Friday’s spikes, prices remain around 10% lower than this time last year, reflective of a volatile market environment that previously saw prices soared to over $100 a barrel following Russia's invasion of Ukraine. Asian and European share markets reacted negatively, with Japan's Nikkei index falling 0.9% and the UK's FTSE 100 dropping 0.3% during midday trading. Similarly, U.S. indices began the day lower, with the Dow Jones down by 1.5%.

In times of uncertainty, investors have flocked to "safe haven" assets such as gold and the Swiss franc, leading to a 1.2% increase in gold prices, reaching $3,423.30 an ounce. Analysts suggest energy traders are closely monitoring the developments in the ongoing conflict, indicating that circumstances could either de-escalate like past incidents or lead to an all-out war impacting oil supplies in the region.

Experts from Capital Economics caution that if Iran’s production capabilities are targeted, prices could surge even higher, potentially reaching $80 to $100 a barrel. This, however, may prompt other oil-producing nations to ramp up their output to stabilize the market. Rod Dennis from the UK's motoring body, the RAC, emphasized that predicting the long-term impact of these price shifts remains challenging, dependent on the longevity of increased wholesale fuel costs.

In a worst-case scenario, Iran may retaliate by threatening the Strait of Hormuz, a critical juncture for global oil transport, through which roughly 20% of the world's oil trade passes. Analysts stress that the market’s immediate reaction is just the beginning, as traders will need to assess the unfolding situation in the coming days.

As tensions spiral in the Middle East, both oil traders and global markets brace for the ongoing turmoil, awaiting clarity on the future of energy supplies amidst conflict.