Israel carries out limited strike against Iran, source says

Israel launched a limited direct military attack on Iranian soil early Friday morning, marking the latest escalation in a series of back-and-forth strikes between the two foes, a source familiar with the situation told NBC News.

Iranian state media outlets reported explosions in the central Iranian city of Isfahan, but officials in the country have said they were caused by air defenses shooting down drones, Reuters reported. Israel has not commented on the events.

The news comes days after Iran launched its first-ever direct attack on Israel in the form of more than 300 drones and missiles, which were mostly intercepted by Israeli air defenses and caused no deaths.

Tehran said the attack was retaliation for an Israeli strike on an Iranian diplomatic compound on April 1 that killed two senior Iranian generals, among others.

What comes next may now depend on Iran’s response, and whether diplomatic measures are taken by outside parties to de-escalate. Markets reacted to the news, with oil prices jumping more than 3% on fears of what has thus far been more of a shadowy proxy war breaking out into the open.  

Safe haven assets also rose, with spot gold prices surging to a fresh all-time high of $2,411.09 per ounce, while futures on the Dow Jones Industrial Average slid 280 points, or 0.76%. S&P 500 futures fell 0.88%, and Nasdaq 100 futures were down 0.98%.

Flights to Tehran, Isfahan and Shiraz airports have been suspended, Iran’s Fars news agency reported. Multiple flights could be seen being diverted over Iranian airspace early Friday, aviation tracking website Flight Radar 24 showed.

— CNBC’s Ying Shan contributed to this report.