What Wall Street’s Missing About Israel’s Nuclear Strike on Iran

Last night, as you’ve no doubt heard, Israel launched a large targeted air strike on Iran, hitting its Natanz atomic facility – a significant escalation in regional tensions.. 

Now stocks are crashing on fears that this could seriously heighten geopolitical instability around the globe..

But we’re here to tell you that, while those worries are understandable, this battle should remain contained to the region for now…

For long-term investors, history suggests that markets often recover from geopolitical shocks – offering opportunities amid the volatility. 

Here’s why we think that’s the case. 

What Just Happened: Israel’s Air Strike on Iran’s Nuclear Sites

Just hours ago, on Friday morning, Israel launched a major preemptive operation – dubbed Operation Rising Lion or Am KeLavi – blitzing Iran’s nuclear and missile sites, including the Natanz facility and key military leadership in Tehran. Reportedly, this attack killed Islamic Revolutionary Guard Corps (IRGC) Commander Hossein Salami and two nuclear scientists in the process.

And while Israel has struck Iran before, this is the first time it’s directly hit a nuclear facility.

In April 2024, Israel carried out a limited strike near Isfahan, targeting air-defense radar that protected the Natanz nuclear site. Though close, this did not directly hit enrichment centrifuges or nuclear infrastructure. 

Then in October, Israel launched a larger missile and air campaign that hit air defenses, missile production, and even a nuclear-related research complex at Parchin – but once again, no direct attack on enrichment or centrifuge facilities.

Friday’s strike on core nuclear sites (and key officials) marks an escalation beyond earlier attacks.

As a result, some geopolitical experts are warning that ‘this time is different’ and that the Iranian response could be much more severe than what we saw throughout 2024. 

Such a severe response could risk disrupting oil supplies, spiking oil prices, reigniting global inflation, fracturing already-frayed geopolitical relations, plunging the global economy into a recession, and dragging everyone into World War III.

There is definitely a potential apocalyptic outcome at play here.

But history says it is very unlikely to unfold that way…

Why Iran Will Retaliate Via Oil

No one wants a full-blown war in the Middle East. That seems especially the case for Iran, which has already been weakened militarily and politically and probably wouldn’t stand a chance in an escalated conflict against both Israel and the United States.

But it also can’t just lay down and let Israel steamroll it with airstrikes. It needs to respond in some way.

And we believe that response will largely be to weaponize oil.

Historically, Iran has leveraged oil and maritime disruptions to escalate pressure during skirmishes. A salient example is the 2019 Abqaiq-Khurais drone strike, which knocked out about 5% of global oil production and led to a spike in global prices. 

Doing so now could be especially potent…

Because President Trump is intent on lowering U.S. oil prices and keeping inflation low so that he can secure rate cuts. But none of that will happen if oil prices spike to $80-plus. Inflation would stay high, and rate cuts would be off the table.

Iran knows this and, therefore, knows that it can go for the jugular here by weaponizing oil.

Disrupt supply chains and spike oil prices. Reignite global inflation. Pressure Trump to step in and tell Israel to back down.

We think that’s most likely Iran’s strategy here – which means short-term pain, long-term gain for stocks.