08:58 AM EDT, 04/15/2024 (MT Newswires) -- Oil prices weakened early on Monday, surrendering some of the risk premium accorded by investors after Iran's weekend drone and missile attack on Israel caused little damage.

West Texas Intermediate crude for May delivery was last seen down US$0.53 to US$85.13 per barrel, while June Brent crude, the global benchmark, was down US$0.60 to US$89.85.

Iran's planned attack on Israel was widely telegraphed, coming after Israel's April 1 strike on Iran's Syrian embassy that killed senior military leaders. The weekend attack was met by an international coalition of fighter jets and Israeli air-defense systems that allowed few of the weapons to reach targets. Israel is now being pressured to ease any retaliation, lowering concerns of a wider Middle Eastern war that could affect oil production, though it is not certain the conflict will not spread.

"We expect the initial reaction from oil markets to be muted. The attack was well telegraphed and appeared planned to inflict minimal damage. Tehran has also made it clear it considers it to be an end to the current cycle of escalation. Nevertheless, Israel's response will determine whether the escalation ends or continues. The conflict could still be contained to Israel, Iran and its proxies, with possible involvement of the US. Only in an extreme case do we see it realistically impacting oil markets," ANZ Bank said in a note

Still, a geopolitical risk premium remains in place as Israeli continues its war in Gaza and Ukraine attacks Russian refineries, as Israel's response is awaited.

"Crude prices already included a risk premium, and unless the market faces a real disruption to supply, the risk of an upside spike towards USD 100 remains limited. All eyes on Israel, and their response," Saxo Bank noted.