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Oil prices surged on Friday as Israel’s air strikes against Iran threatened supplies across the region and sparked a rush to haven assets.

Brent crude, the international benchmark, was up 8.8 per cent at $75.48 in London after earlier spiking more than 12 per cent. West Texas Intermediate, the US benchmark, climbed 9 per cent to $74.15.

Michael Alfaro, chief investment officer at Gallo Partners, a hedge fund focused on energy and industrials, said the attack on Iran’s nuclear facilities marked a “seismic escalation” in the conflict.

“We’re staring down the barrel of a prolonged conflict that’s almost certain to keep oil prices elevated,” he said.

Israel’s strikes targeted Iran’s nuclear programme, military facilities and killed its top two commanders. Iran said none of its oil installations were hit in the attack.

Global stock markets fell and gold, a haven asset, jumped. Futures tracking the S&P 500 were down 1.2 per cent and the gold price was up 1 per cent at $3,418 an ounce.

There are multiple risks for the energy sector from a renewed conflict.

The Strait of Hormuz, the narrow waterway separating Iran from the Gulf states, is a conduit for about a third of the world’s seaborne oil supplies. Iran has repeatedly threatened to close it in the event of an attack.

Some of the world’s largest oilfields, including in Saudi Arabia and Iraq, are also within reach of Iran’s missiles and drones. In 2019 Iran was widely believed to be behind an attack on Saudi Arabian oil facilities that briefly pushed up the price of crude.

Qatar is one of the world’s largest suppliers of liquefied natural gas and its shipments must traverse Hormuz to reach international markets at a time of tight global supplies. 

Helima Croft, a former CIA analyst who is now at RBC Capital Markets, questioned whether the latest strike was a limited military engagement, as occurred in the autumn, or if Iran would target regional energy supplies.

“The key question is whether Iran seeks to internationalise the cost of tonight’s action by targeting regional energy infrastructure,” Croft said.

US President Donald Trump has previously pledged to keep oil prices low to help tame inflation.

After Russia’s full-scale invasion of Ukraine that started in 2022, the Biden administration released about 300mn barrels of crude from the US Strategic Petroleum Reserve, the world’s largest emergency stockpile, to help keep prices in check.

If the oil price surge is prolonged or supplies are disrupted from the Middle East, Trump could use the SPR, but in the past he has criticised former president Joe Biden for draining the reserve to its lowest level in 40 years. The SPR has around 400mn barrels, well below its 727mn barrel capacity.

Traders will also look for any response from the Opec+ group of oil producers. Saudi Arabia, one of the group’s most powerful members, condemned Israel’s attack on Friday. 

The group, of which Iran is a member, has been raising production in recent months but may face additional pressure from the Trump administration to tap its additional capacity to keep markets well supplied.

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An Air India flight to London Gatwick has crashed in Ahmedabad in western India shortly after take-off, with 242 people on board.

Air India said that those on the Boeing 787-8 aircraft included 169 Indian nationals, as well as 53 British citizens, seven Portuguese and one Canadian. There were also 10 cabin crew and two pilots.

An Indian government official said there were 209 confirmed deaths, including people who had been on the ground when the plane crashed.

The Boeing 787-8 Dreamliner was more than 10 years old, according to Flightradar24, which added that after reaching an altitude of 625 feet, the aircraft began to descend with a vertical speed of 475 feet per minute.

The aircraft tracking service added that the plane’s signal was lost at 1.38pm local time, just after take-off.

Rohan Krishnan, head of Indian doctors’ association Faima, said the flight crashed into the BJ Medical College in Ahmedabad, adding that some students had been taken to hospital.

It is the first time a 787 has crashed, according to the Aviation Safety Network database.

Boeing shares were down 7 per cent in pre-market trading on Thursday.

The crash comes as Boeing tries to rebuild trust after a series of safety crises including two fatal crashes of its 737 Max model in 2018 and 2019, which led to the departure of its then chief executive Dennis Muilenburg.

The mid-air blowout of a door plug on a 737 Max-9 jet operated by Alaska Airlines in January 2024 triggered another clear-out of top management amid concerns over the quality of Boeing’s manufacturing.

Kelly Ortberg, who became the manufacturer’s new chief executive last August, has sought to stabilise Boeing’s production and improve its quality control processes, as well as shore up its balance sheet.

The company said on Thursday that its “thoughts are with the passengers, crew, first responders and all affected”.

Police in Gujarat state told the Financial Times that the plane crashed “within 10 minutes” of taking off from the airport in Ahmedabad.

The Indian aviation regulator said the aircraft made a mayday call to air traffic control “but thereafter no response was given by the aircraft to the calls made by ATC”.

UK Prime Minister Sir Keir Starmer wrote on X on Thursday: “The scenes emerging of a London-bound plane carrying many British nationals crashing in the Indian city of Ahmedabad are devastating.”

“My thoughts are with the passengers and their families at this deeply distressing time,” he added.

India’s Prime Minister Narendra Modi said: “The tragedy in Ahmedabad has stunned and saddened us. It is heartbreaking beyond words.”

Natarajan Chandrasekaran, chair of Tata, which took over the airline from state control in 2022, said: “With profound sorrow I confirm that Air India Flight 171 operating Ahmedabad London Gatwick was involved in a tragic accident today.”

Tata had promised to modernise the carrier, and, in 2023, Air India agreed a deal with Boeing and Airbus to buy 470 new aircraft, one of the largest orders in aviation history.

John Strickland, an aviation consultant, said Boeing’s 787 had a “good in-service safety record”, adding that it was “too early to speculate on the likely cause” of the accident.

Air India had faced the “challenges of decades of state ownership and poor management”, said Strickland.

However, he said that since being sold to Tata, experienced management had been brought in and the carrier “had begun to move in the right direction both operationally and commercially”.