09:21 AM EDT, 04/22/2024 (MT Newswires) -- Oil prices retreated early on Monday on a deflating risk premium and adequate supply.

West Texas Intermediate crude for May delivery was last seen down US$0.25 to US$82.89 per barrel, while June Brent crude, the global benchmark, was down US$0.88 to US$86.41.

The drop follows on Israel's muted retaliation last week to a missile and drone attack from Iran this month that caused only minor damage, easing fears of a wider Middle East war that could disrupt oil supplies.

"In the lead -up to the Israeli action, there had been heightened concern about the safety of the Iranian nuclear facilities," Helima Croft, head of global commodity strategy and MENA research at RBC Capital Markets, said in a Friday note. "Like the much larger Iranian action on Saturday, the Israeli response seemed to have been designed to avoid causing civilian casualties and significant infrastructure damage. While Israeli and Iranian leadership both seem to be avoiding a wider war at this point, we could envision that some hardliners may be displeased with the limited nature of the responses."

Monday's drop also comes as spring demand remains light, with the Energy Information Administration reporting the fourth-straight rise in US oil inventories, even as 2.2-million barrels of voluntary production cuts from OPEC+ continue. The cartel will meet in early June to decide whether to unwind the cuts or extend them into the third quarter.

The International Monetary Fund last week noted Saudi Arabia needs oil prices of at least US$96.20 per barrel to balance its budget after cutting its production to 9.3-million barrels per day, suggesting the lead OPEC member will look to push the cartel to continue restraining output to support high prices.