Iran Conflict Update

The United States and Israel carried out coordinated strikes inside Iran over the weekend. Officials said the targets were linked to Iran’s missile systems and nuclear infrastructure. With talks stalled and tensions rising, the strikes were framed as a move to remove what they described as immediate threats.

Iranian state media confirmed that Supreme Leader Ayatollah Ali Khamenei had been killed on the second day of strikes, ending his roughly 36-year leadership. That single development shifted this from a forceful military warning to something far more consequential. Removing a long-standing head of state leaves little room for quiet de-escalation. President Trump has since told media he expects the situation to be resolved within four weeks.

Iran responded quickly. Missiles and drones were launched toward Israel and U.S. military facilities across the Gulf. Explosions were reported in Israeli population centres, including areas around Jerusalem. Activity was also reported near U.S. bases in Bahrain, Kuwait, Qatar, the UAE and Saudi Arabia. Israel confirmed civilian casualties. The U.S. has confirmed three service members killed.

Israeli Prime Minister Benjamin Netanyahu said operations would continue and could intensify. Defence officials stated their focus remains on degrading Iran’s missile capability and command structure, with command centres reportedly targeted. Airspace closures are now in effect across parts of the Gulf, forcing airlines to suspend or reroute flights and leaving travellers stranded. Shipping lanes are under close watch. Although Iran has stated it does not intend to close the Strait of Hormuz, some oil tankers are avoiding the passage. OPEC has indicated it stands ready to increase production if required.

Nuclear negotiations that were underway only days ago have effectively collapsed. President Trump said Iran is open to talks but argued they should have engaged earlier. Iran has framed the killing of its leader as an act of war and has pledged further retaliation. There is also the risk that allied groups in Lebanon, Iraq or Yemen could become more directly involved, broadening the conflict and undermining expectations of a swift resolution.

The coming days will be critical. If the conflict remains contained between the current parties, markets may stabilise once the initial shock is absorbed. However, any direct disruption to energy infrastructure or shipping routes could see oil move sharply, with inflation concerns re-emerging quickly.

Gold could gap higher on the scale of this escalation. So far, Bitcoin has shown only a muted reaction. While Bitcoin often trades as a 24/7 sentiment gauge for broader risk assets, this episode may prove different. Given the scale and intensity of events, it would be surprising if equity markets were to remain unaffected.