In a recent announcement, Iranian Foreign Minister Hossein Amirabdollahian revealed that Iran does not intend to retaliate against Israel's retaliatory strike launched last Friday. This statement has alleviated concerns in the market, resulting in a drop in crude oil futures on Monday.

The West Texas Intermediate contract for May experienced a decrease of 21 cents, settling at $82.93 a barrel, while the June Brent futures dropped 54 cents to reach $86.76 a barrel. The decline in oil prices comes on the heels of a 3% fall in both U.S. crude oil and Brent benchmarks last week, even though they have seen significant gains of around 16% and 13% respectively this year.

Minister Amirabdollahian stated to NBC News that Iran would refrain from any further reactions unless Israel initiates new actions that threaten Iranian interests. This announcement has helped ease fears that the escalating conflict between the two countries would lead to a full-blown war.

Traders on the market have dismissed the notion that the tit-for-tat strikes between Iran and Israel would escalate into a more significant conflict. Instead, their focus is expected to shift towards supply and demand fundamentals in the coming week.

While some geopolitical tensions persist, Tamas Varga, an analyst with oil broker PVM, suggests that the market reaction indicates a prolonged oil price rally may occur if the Strait of Hormuz is blocked or if Saudi Arabia becomes directly involved in the conflict.

The decline in oil prices following Iran's decision not to escalate the situation with Israel highlights the importance of geopolitical developments in influencing commodity markets. As attention returns to supply and demand dynamics, market participants will closely monitor how these factors shape the trajectory of oil prices in the near future.

Overall, Iran's choice to refrain from further actions against Israel appears to have assuaged concerns, providing some stability to the fluctuating oil market.