Full-scale war in the Middle East moves another step closer – Commerzbank

The conflict in the Middle East became more explosive overnight: after the US withdrew embassy staff from Iraq, and amid reports that Israel could attack Iran, military strikes were carried out last night, Commerzbank's FX analyst Michael Pfister notes.

A full-scale war looms in the Middle East

"According to initial media reports, the head of the Iranian Revolutionary Guard and several nuclear scientists were killed. The Israeli president emphasised that the attacks would continue until 'the threat is removed', while Iran has, of course, announced a sharp response. The price of oil rose by up to 13%, while currencies considered safe havens, such as the Swiss franc and the Japanese yen, gained ground."

"It is impossible to say how the situation will develop in the coming days. Either way, this is a significant escalation which brings us closer to full-scale war in the Middle East. Statements by officials also suggest that the attacks may not be over yet."

"Iran risks losing credibility if it does not defend itself against such attacks, while Israel may now feel encouraged to continue after crossing the threshold. Until the danger of further escalation has passed, safe assets are likely to remain in demand."