Middle East tensions escalate after Iran attacks Israel

The geopolitical tensions between Israel and Iran intensified over the weekend, as Iran launched drones toward Israel late Saturday, the Israeli military announced/

Citing the Islamic Revolutionary Guard Corps, Iran’s state-run media reported that dozens of drones had been fired in retaliation to the suspected Israeli attack on Iran’s consulate in Damascus on 1 April.

Iran successfully targeted Israel's most important military base in Negev using Kheibar missile, Iranian government’s newspaper reported.

Iranian Foreign Ministry, said in a statement, “Iran, if necessary, will not hesitate to take further defensive measures to safeguard its legitimate interests against any military aggressions and unlawful use of force.” 

Israel’s military spokesman said the launches numbered more than 300 but 99% of them were intercepted.

“Iran fired 170 drones, more than 30 cruise missiles and more than 120 ballistic missiles. Of those, several ballistic missiles reached Israeli territory, causing minor damage to an air base,” he added.

Iran backed Yemen's Huthi rebels and Lebanon's Hezbollah joined the attack. Meanwhile, the UK Ministry of Defence confirmed late Saturday that British Royal Air Force jets in the Middle East “will intercept any airborne attacks within range of our existing missions, as required.”

In a nationwide address, Israeli Prime Minister Benjamin Netanyahu said, "in recent years, and especially in recent weeks, Israel has been preparing for a direct attack by Iran. Our defensive systems are deployed; we are ready for any defensive and offensive scenario. The State of Israel is strong. The IDF is strong. The public is strong." 

However, Israeli President Isaac Herzog told CNN's Wolf Blitzer on Sunday, “Israel is not seeking war after Iran's attack and "balance is needed in this situation."

US President Joe Biden said on X that “I just met with my national security team for an update on Iran’s attacks against Israel. Our commitment to Israel’s security against threats from Iran and its proxies is ironclad.”

UN Secretary-General Antonio Guterres condemned Iran’s drone attacks targeting Israel as a “serious escalation” and called on all sides to show restraint to avoid a devastating regional conflagration.

The UN Security Council held an emergency meeting on April 14 over Iran’s unprecedented drone and missile attack on Israel. Further, the UK, France, and Egypt condemned Iran's actions, while Saudi Arabia called for restraint.

Market reaction

In the opening trades on Monday, traders seem to look through the anticipated escalation in the Middle East, as a threat of an imminent Iranian attack on Israel loomed in the past week.

FX majors are seeing a limited reaction to the widening Middle East geopolitical tensions while the S&P 500 futures, a key risk barometer, post moderate gains in early Asia.

However, Gold price attracts fresh haven demand, rising near 0.50% to nearly $2,370.