Weeks of speculating about how Israel would respond to Iran’s attacks had markets worried about strikes on energy infrastructure or something that would spark a broader war.

Instead, the attacks look to be measured and US President Biden immediately called for a halt to escalation.

Reports from Iran say the attacks caused only limited damage and Supreme Leader Ayatollah Ali Khamenei didn’t sound eager for a further fight, though the comments certainly didn’t rule it out.

“The evil committed by the Zionist regime (Israel) two nights ago should
neither be downplayed nor exaggerated”, IRNA cited Khamenei as saying.

The Iranian Foreign Ministry said Iran would respond to the airstrikes,
calling them a clear violation of international law and asserted the right to self-defense.

Missile factories were supposed targets along with other military sites, including air defense.

It’s hard to judge what will come next but I expect the oil market to take this at as a negative at the open. Crude was curiously bid on Friday despite the risk-off tone so I’d imagine about $2 of downside, though I also suspect the market had already sniffed out that energy infrastructure wouldn’t be hit.