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Iran has activated air defence systems across several provinces, according to official news agency IRNA, after reports that an explosion was heard near the city of Isfahan.
Tasnim news agency, which is close to Iran’s elite Revolutionary Guards, reported the explosion. Isfahan is home to a major base for the Iranian military.
Flights in Tehran, the capital, and the cities of Isfahan and Shiraz have been suspended, IRNA said.
Oil futures jumped on Friday following the reports. Futures for Brent crude, the international oil benchmark, rose 3.9 per cent to $90.52 per barrel while West Texas Intermediate, the US marker, climbed 4.0 per cent to $86.04 per barrel.
Gold, a haven during times of geopolitical uncertainty, rose as much as 1.6 per cent to $2417.89 per troy ounce.
The White House and Pentagon declined to comment.
Tension is high in the Middle East over possible Israeli retaliation after Iran fired more than 300 armed drones and missiles at the Jewish state last weekend, the first time Tehran has targeted the country directly from its own soil.
Iran said the strike was a response to an attack on its embassy in Damascus that killed senior military commanders, which Tehran blamed on Israel.
Israeli officials have said indicated they would respond, despite western pleas for restraint, the impact it could have on the conflict in Gaza and the potential that any retaliation could push the Middle East to all-out war.
This is a developing story
