In a bid to dismiss the risk of a broader war between Israel and Iran that could disrupt oil supplies, crude oil futures experienced a significant drop of over 3% on Wednesday. The West Texas Intermediate contract for May delivery plummeted by $2.67, settling at $82.69 per barrel, while June Brent futures slipped by $2.73 to settle at $87.29 per barrel, a decline of 3.03%. This downward trend resulted in U.S. oil and the global benchmark recording a decrease of more than 3.4% for the week.

Analysts believe that the ongoing tensions surrounding the Gaza conflict and Iran's missile attack on Israel have influenced the previously inflated "war premium" in oil prices. "Oil prices go about their business of unwinding some of the war premium that has been priced-in due to the continuing tensions surrounding the Gaza conflict and the subsequent Iranian missile onslaught on Israel," mentioned John Evans, an analyst at oil broker PVM, in a note on Wednesday.

Despite the conclusion of peace between Israel and Iran, concerns about potential disruptions in oil supplies had been looming. However, Israel's restraint thus far and its unlikely retaliation of targeting Iranian oil production or export facilities have eased these worries. Consequently, the hostilities in the Middle East have not resulted in any supply disruptions.

Andrew Lipow, president of Lipow Oil Associates, stated that it is improbable for the ongoing escalations between Iran and Israel to lead to a disturbance in oil supplies. He added, "Theories of Iran-Israel tension disrupting oil supplies have fizzled out." Furthermore, Manish Raj, managing director of Velandera Energy Partners, emphasized that while peace may have come to an end, oil continues to flow.

It is worth noting that U.K. Foreign Secretary David Cameron acknowledged Israel's decision to act against Iran but expressed the hope that any actions taken would not escalate the situation further. Iranian President Ebrahim Raisi warned of a "massive and harsh" response if Israel were to counterattack.

With the prevailing situation of relative calm and the assurance of continued oil flow, the market is experiencing a decline in oil prices. However, it remains to be seen how the ongoing conflicts and geopolitical tensions will continue to impact the energy markets in the coming days.

Overall, as traders unwind the war premium and concerns of a wider conflict between Israel and Iran recede, oil prices have retreated, providing temporary relief to the market.