Brent Crude prices surged 4.25% on Friday morning WST following reports Israel has attacked Iran in the last several hours.
The price shot up from US$87/bbl to $90.6/bbl in the space of two hours on Friday morning, after a decline in prices below the US$90 mark midweek.
Gold prices, meanwhile, have spiked back to US$2,400/oz – the commodity’s most recent all time high.
In lunchtime trades, the ASX200 had fallen to -1.60%. By 1.40pm AEST, the ASX200 had recovered slightly, down -1.30%.
At the same time, Brent Crude had dipped back down to US$89/bbl, suggesting parts of the market believed the initial response could have been an over-reaction.
Gold similarly dipped back down below US$2,400/oz to sit around US$2,380/oz.
The strikes in Iran are reported to be the result of Israeli missiles fired into the country near the city of Isfahan.
According to Al Jazeera, Isfahan is a strategic site for Iran where military research sites are located – and a nearby city, Natanz, is home to Iranian nuclear weapons facilities.
Subsequent reports have suggested no nuclear infrastructure was affected by an Israeli attack.
Approaching 1pm on Friday, reports indicated that Israel was preparing for a strike in northern Israel as alarms began to sound.
The surge in oil prices suggests the market is expecting this to trigger a far larger war in the Middle East.
Iran is a major OPEC oil producer, and, a country widely reported to possess nuclear weapons.