The Israeli military attacked Iran early Friday, and oil markets have gotten the jitters in response. Initial reports suggest that Iran is downplaying the impact of the strikes, which might mean that tensions between the two countries could de-escalate.

Brent crude futures immediately spiked almost 5% before settling lower. The oil benchmark was trading at about $87 a barrel on Friday morning.

Oil markets have been on edge since Israel’s invasion of the Gaza Strip began last year, both because of its physical proximity to several key oil producers and due to the threat that Iran might shut down the crucial Strait of Hormuz shipping channel. In a research note Thursday, Oxford Economics wrote to clients that “surprisingly, the reaction of financial markets has been muted, which suggests that the perceived threat of a wider conflict in the Middle East is low.”

After the Oct. 7 Hamas attack on Israel killed about 1,200 Israelis and left about 250 taken hostage, Israel said that it would “destroy” the Iran-allied Hamas. The resulting Israeli invasion of the Gaza Strip has killed at least at least 35,000 Palestinians, including at least 12,000 children.

In response, several other Iran-allied groups have engaged in the conflict. Yemen’s Houthis have been targeting Israel-bound ships in the Red Sea with missiles and drones. Israel and Hezbollah militants in southern Lebanon have clashed. And Israel has also targeted Iranian allies in Iraq and Syria.

Israeli forces conducted an air strike on the Iranian consulate in Syria earlier this month. Iran responded by launching a barrage of missiles and drones at Israel last weekend, almost all of which were shot down.

The United States, Israel’s most important ally, has urged Israel not to escalate the situation further. And S&P downgraded Israel’s credit rating, saying the situation “heightens already elevated geopolitical risks” for the country.

After the latest Israeli airstrikes, Capital Economics told clients Fridaythat “the attack — and the threat of retaliation to it — has increased the risk to physical supply of oil, but the response this morning suggests that some of that risk has already been priced in.”