Key Takeaways:
Israeli intelligence assesses Iran relocated thousands of uranium-enrichment centrifuges to a fortified underground complex, setting the stage for a potential U.S. strike that could roil global energy markets.
Israeli intelligence believes Iran moved thousands of uranium-enrichment centrifuges into tunnels beneath Pickaxe Mountain last fall, U.S. and Israeli officials said, after American and Israeli strikes pummeled Iran's three main nuclear sites during the 12-day war in June 2025.
"It is plausible that Iran moved centrifuges into the tunnels," said David Albright, president of the Institute for Science and International Security, a nonproliferation think tank that has tracked activity at the site through satellite imagery.
The subterranean complex reaches 300 to 450 feet beneath solid rock, making it deeper and more fortified than Iran's Fordow enrichment facility. Satellite imagery reviewed by the Institute for Science and International Security showed truck traffic, tunnel reinforcements and an expanded security perimeter over the past 15 months. Iran has produced about 1,000 pounds of uranium enriched to 60 percent, near weapons-grade, while denying it seeks nuclear weapons, according to the International Atomic Energy Agency.
President Trump on July 13 identified Pickaxe as "a possible target for a nice big fat shot," the first time he explicitly named the site as a potential target, raising the risk of a direct U.S.-Iran military confrontation that could disrupt oil flows from the Strait of Hormuz, which handles about 21 percent of global crude trade.
Oil Risk Premium Widens on Strike Fears
Brent crude futures extended gains on the news as traders priced in a higher probability of supply disruption. The Strait of Hormuz, a narrow waterway between Iran and Oman, saw about 17 million barrels per day of crude and petroleum products transit in 2025, according to the U.S. Energy Information Administration. Any military action targeting Iran's nuclear infrastructure could prompt Tehran to retaliate against shipping in the waterway, a scenario that pushed the oil risk premium to its widest since the June 2025 conflict.
Gold rose as investors sought safe-haven assets, while U.S. equity index futures edged lower on the prospect of prolonged Middle East instability. Defense sector stocks outperformed, with the S&P 500 aerospace and defense sub-index climbing on expectations of increased U.S. military spending.
The last time the U.S. directly struck Iranian nuclear facilities during the June 2025 war, Brent crude surged more than 8 percent in a single session, and the VIX index of implied equity volatility spiked above 30. The current escalation carries similar risk, with options markets pricing a 35 percent probability of a strike on Pickaxe Mountain within the next 30 days, according to risk analytics data.
IAEA Access Denied as Activity Continues
Iran has provided the IAEA no access to Pickaxe Mountain and no information about its work or plans at the site, the nuclear watchdog said. IAEA Director General Rafael Grossi noted in March that Iran in 2021 announced its "intention to have nuclear activity" at the facility. Nate Swanson, a former U.S. National Security Council director for Iran under the Biden administration, said the lack of verification is the core concern. "A covert breakout is the worst-case scenario," Swanson said. "We don't know what Iran's intentions are, but the fact that we can't verify this site underscores how problematic the status quo is."
An Israeli military official familiar with the targeting effort expressed concern that recent airstrikes had not sufficiently degraded Iran's nuclear-weapons-related work, saying further action, including at Pickaxe Mountain, may be necessary. Israeli Prime Minister Benjamin Netanyahu has been urging Trump to intensify military action against Iran to further derail Tehran's nuclear program and reconstruction efforts.
The standoff comes as the U.S. has stepped up attacks over the past 10 days, with Trump warning that Iran would face consequences for any attacks on American personnel. "We're watching Pickaxe Mountain closely," Trump said in the July 13 interview. "We see no activity there. They're not doing well with their nuclear situation. Every time we hear about it, we blow it up."
This article is for informational purposes only and does not constitute investment advice.
