Stock futures took a dip and oil prices saw an overnight increase after an Israeli missile struck Iran in response to Iran’s recent attack on Israel. Concerns among investors are rising as tensions escalate between the two countries, potentially impacting global oil supplies and energy prices.

Following Iran’s drone and missile attack on Israel on April 13, crude oil prices spiked to their highest level in months, surpassing $90 early Friday before retreating as the Iranian government downplayed the impact of the Israeli strike. Despite the volatility, there has been no significant disruption to oil flow in the Middle East so far.

Jim Burkhard, head of research for oil markets at S&P Global Commodity Insights, highlighted that the recent military escalation between Iran and Israel has not significantly affected oil flow in the region, leading to relatively restrained oil price reactions. However, the potential for further hostilities between the two nations poses a new and dangerous phase of mutual antagonism that could spill over into the oil market.

In the afternoon trading session, the S&P 500 was down 0.9%, the Dow saw a 0.4% uptick, and the Nasdaq experienced a 2% decline. Meanwhile, U.S. benchmark crude oil prices were up 11 cents at $82.22 per barrel on the New York Mercantile Exchange, with Brent crude, the international standard, rising 7 cents to $87.18 per barrel.

Wall Street analysts interpreted the limited Israeli strike on Iran and Tehran’s measured response as a potential signal that both governments are seeking to contain the crisis. Adam Crisafulli of Vital Knowledge noted that while geopolitical tensions will continue to influence the market, recent events in Iran suggest a somewhat encouraging development that may help ease tensions between Israel and Tehran, at least temporarily.

Neil Shearing, group chief economist at Capital Economics, emphasized that while the recent attack and threat of retaliation have heightened the risk to physical oil supply, market response indicates that some of that risk has already been factored into prices. Gasoline prices in the U.S. have risen over the past month, with the national average now at $3.67 per gallon, driven by various factors including seasonal demand and maintenance activities at oil refineries.

Despite concerns over Middle East conflicts and their impact on oil markets, AAA does not anticipate a surge in domestic gas prices for the time being. The organization points to a lull in fuel demand between the end of spring breaks and the upcoming Memorial Day holiday as a contributing factor to the stability in gas prices.

Overall, geopolitical tensions remain a significant factor influencing energy markets, with implications for global oil supply and prices, but recent developments suggest some efforts to contain the crisis between Israel and Iran. Investors and analysts will continue to monitor the situation for any further escalation and its potential effects on the oil market.