Iran acknowledges drone attack by Israel and says it failed

Brent crude oil climbed above $90 a barrel before trading around $87.40 as of 10:45 a.m. in London, up less than 1% on the day.

Gold also quickly reversed its jump. Yields on 10-year U.S. Treasuries — another haven for global investors in times of geopolitical stress — fell around five basis points to 4.58%.

The shekel weakened this week to its lowest level in 2024, though was steady on Friday at 3.79 per dollar. That was despite S&P Global Ratings downgrading Israel by one level to A+ — still easily in investment-grade territory — hours before the reported attack.

Israel had vowed to retaliate against Iran for its barrage of more than 300 drones and missiles, the vast majority of which were destroyed before hitting their targets. While there was limited damage and no one was killed, Israel said it would send a message of weakness to Iran and its other enemies if it didn’t respond.

Iran said it was a justified reaction to a strike on its embassy compound in Syria on April 1, which killed several Iranian officers and was blamed on Israel.

The U.S., Europe and Arab states urged Netanyahu to act with restraint. The foreign ministers of the UK and Germany both traveled to Israel on Wednesday to see him.

Netanyahu faced a dilemma this week. While many of his far-right coalition members insisted on a firm response, the Israeli public was split on whether the country should react at all. Many, according to a poll, said it wasn’t worth provoking Iran and straining Israel’s ties with the U.S.

Israel is more than six months into the war in Gaza and still intent on attacking the city of Rafah, where it says several thousand Hamas fighters are lodged. Many in the country want the government to focus on finishing the conflict against the Iran-backed militant group that launched a deadly invasion on Oct. 7.

Ball in Iran’s Court

If attributed to Israel, the nature and scope of the strike on Friday — including any casualties — could determine whether the tit-for-tat responses between the two sides escalate or start to get scaled back.

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