This paper shows how the Israel–Iran confrontation in June 2025 set off a market reaction that lasted weeks, not days. Oil, gold, and the U.S. dollar all gained as investors looked for safer ground. At the same time, the euro’s recent momentum came under pressure, exposing Europe’s reliance on imported energy and the limits of its shared governance when tested by crisis. Between June 13 and July 11, the euro moved within a narrow band around 1.167 to 1.170 USD, showing moderate resilience yet exposing its underlying fragility. Shifts in oil and gold prices illustrate how quickly a regional security crisis can send capital moving across borders, reminding us that in a connected global economy, geo-economic risks never stay contained for long.
In mid-June 2025, Israel hit Iranian nuclear and military sites. Iran responded it, with over 150 ballistic missiles and more than 100 drones targeting Israeli energy and transport hubs.
However, the conflict can be seen as local, but the economic shock spread far beyond the region. Commodity markets and currency desks reacted within hours, adjusting to fresh risks tied to energy supply routes and shifting investor sentiment.
On June 13, Brent crude futures rose by more than seven percent, reaching close to 78.50 USD per barrel before settling around 74.23 USD, as traders priced in possible disruptions to the Strait of Hormuz, a strategic corridor for global oil shipments (Reuters, 2025a; Reuters, 2025c). Gold increased to 3,430 USD per ounce, its highest level since April, as market participants sought safe-haven assets outside sovereign currencies (Reuters, 2025c; Reuters, 2025d).
Oil prices fluctuated in the following weeks. By June 22, Brent had fallen roughly seven percent to approximately 71.48 USD (Reuters, 2025f). However, renewed supply-side concerns, lower U.S. production forecasts, and continuing regional risks supported prices above 70 USD into early July. On July 8, Brent was trading near 70.15 USD (Reuters, 2025g). By July 11, Brent settled at 68.83 USD, slightly higher day-on-day but lower over the week, with OPEC+ supply adjustments and concerns about global demand keeping the geopolitical premium in place (Reuters, 2025h). The U.S. Energy Information Administration maintained its average Brent price forecast for 2025 at 68.89 USD, underlining the market’s continued sensitivity to geopolitical disruptions (Reuters, 2025i).
Gold remained stable through mid-July, supported by renewed tariff measures in the U.S. but contained by dollar strength (Reuters, 2025b). U.S. equity markets softened in early July due to renewed trade friction but stayed within historical norms (Reuters, 2025c; Barron’s, 2025d).
The U.S. dollar confirmed its role as the primary global safe asset. The Dollar Index gained about 0.5 percent on June 13 and reached its strongest weekly performance since February by July 11 (Market Watch, 2025; Reuters, 2025j). The euro held steady. On July 11, it traded at 1.169 USD, little changed from the previous day’s 1.1709. Most forecasts expect it to stay near 1.16 through the third quarter and edge back towards 1.17 by year-end. (Capital.com, 2025; C Bonds, 2025).
The crisis reinforced an established hierarchy in global capital flows: gold first, then the dollar, and then the euro. Although the euro gained about seven percent over the year and one percent in the last month (Trading Economics, 2025), its role as a reserve asset remains limited in times of geopolitical tension. Europe’s reliance on imported energy and the ECB’s shared structure still restrict how fast it can respond when a crisis hits.
From June 13 to July 11, financial markets absorbed the effects of a regional conflict that once again demonstrated how local security risks translate into broader economic uncertainty. Oil eased back from its initial spike but kept a layer of geopolitical risk priced in. Gold held its value yet met limits as the dollar stayed firm. The dollar once again proved its status as the world’s primary haven. The euro, meanwhile, stayed broadly steady but again revealed how exposed it remains to energy insecurity and the constraints of collective governance when pressure tests return.
All in all, the June 2025 escalation between Israel and Iran triggered an immediate and far-reaching response across global markets. The episode served as a sharp reminder: even localized conflicts can send economic shockwaves well beyond their borders.
Cansu Ece GÖKŞİN
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