In response to an Israeli missile strike on Iran following Iran's retaliatory attack last weekend, stock futures have dipped while oil prices have risen in overnight trading. Investors are closely monitoring the escalating conflict between Israel and Iran, fearing the potential impact on global oil supplies and energy prices.

Crude prices, which had already reached their highest level in months after Iran's missile attack on Israel on April 13, briefly surpassed $90 on Friday before relinquishing those gains. This was attributed to signs that the Iranian government was downplaying the impact of the Israeli strike. According to Jim Burkhard, head of research for oil markets at S&P Global Commodity Insights, the conflict has not yet affected oil flow in the Middle East, resulting in relatively muted reactions in oil prices. However, Burkhard warns that these direct attacks between the two nations represent a new and dangerous phase of mutual antagonism that could potentially spill over into the oil market.

Market activity during afternoon trading has been mixed, with the S&P 500 down by 0.9%, the Dow rising by 0.4%, and the tech-heavy Nasdaq sliding by 2%. In the oil market, the U.S. benchmark crude was trading 11 cents higher at $82.22 per barrel on the New York Mercantile Exchange, while Brent crude, the international standard, gained 7 cents to $87.18 per barrel.

Despite mounting concerns about heightened tensions in the Middle East, Wall Street analysts interpret Israel's limited strike on Iran and Tehran's measured response as signs that the governments are seeking to contain the crisis. Adam Crisafulli of Vital Knowledge noted that while geopolitics will continue to impact the market, recent events in Iran are encouraging as they may help cool tensions between Israel and Tehran, at least for the time being. Neil Shearing, group chief economist with Capital Economics, also indicated that some of the risk to oil supply has already been priced in due to the response in the market.

Although gasoline prices in the U.S. have been steadily increasing over the past month, currently standing at a national average of $3.67 per gallon of regular, AAA does not anticipate a spike in domestic gas prices for now. This is attributed to a dip in fuel demand between the end of spring breaks across the country and the upcoming Memorial Day holiday. AAA also points out that factors such as increased road usage and maintenance at oil refineries, which can reduce supplies, typically contribute to higher fuel costs during this time of year.

As the Israeli-Iranian conflict intensifies and tensions rise in the Middle East, the impact on global oil supplies and energy prices remains a concern for investors and observers alike. While efforts are being made to contain the crisis, the possibility of escalation continues to weigh on market sentiments.