U.S. stock index futures were sharply lower Friday after the U.S. confirmed an airstrike that killed a top Iranian commander, sending oil prices surging and hiking geopolitical concerns. 

At around 7:25 a.m. ET, Dow Jones Industrial Average futures were down 280 points. S&P 500 and Nasdaq 100 futures also pointed to sharp losses at the open.

U.S. crude oil futures shot up around 4% to $63.56 per barrel, raising concerns about an energy shock on the global economy. Airline stocks fell broadly on the threat of higher oil prices. United Airlines, American Airlines, Delta Air Lines and JetBlue Airways all dropped more than 2% in the premarket. 

Investors largely fled risk assets such as stocks in favor of traditional safe havens such as gold and Treasurys. Gold futures jumped 1.4% to $1,548.70 per ounce. The benchmark 10-year Treasury yield, which moves inversely to the price, dropped to around 1.81%.

The Cboe Volatility Index (VIX), widely considered to be the best fear gauge on Wall Street, traded about 3 points higher, or 23.7%, at 15.43.

Energy stocks were the lone winner on Friday. The Energy Select Sector SPDR Fund (XLE) rose more than 1%. Devon Energy and Marathon Oil rose more than 3% each while Occidental Petroleum jumped traded more than 2% higher. 

The U.S. announced late Thursday that it had killed Iran’s top commander General Qasem Soleimani in Baghdad in an airstrike. Soleimani had been a key figure in Iranian politics and his death has raised concerns over a potential retaliation from the Iranian forces.

Protesters shout slogans against the United States and Israel as they hold posters with the image of top Iranian commander Qasem Soleimani, who was killed in a US airstrike in Iraq, and Iranian President Hassan Rouhani during a demonstration in the Kashmiri town of Magam on January 3, 2020.

Tauseef Mustafa | AFP | Getty Images

Iranian Foreign Minister Mohammad Javad Zarif warned Friday that Iran would retaliate against the U.S. for its actions

“It’s a game-changer,” Dryden Pence, chief investment officer at Pence Wealth Management, told CNBC’s “Squawk Box” on Friday. “We now have vast, broader array of weapons systems that the president has at his disposal. We’ve been able to weaponize economic sanctions now where we can go after individuals … but now I think the ultimate sanction that the president is able to use is an air-strike.”

Pence noted, however, that whatever market volatility that arises from this “will be short-lived.”

Wall Street loaded up on safer assets as an oil spike can spark a recession. That risk is also heightened by the fact that the global economy has been struggling amid a global manufacturing slowdown. 

These moves come after U.S. equities rose to all-time highs on Thursday on the back of a strong performance in the tech sector. However, the optimism entering the new year seems to be fading amid geopolitical tensions.

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