Oil prices slid on Friday after a price spike of more than $3 earlier in the day on reports that Israel had carried out a missile attack on Iran.

A semblance of normality returned to the oil markets after Iran played down the Israeli attacks on its soil.

Brent futures were down 72 cents, or 0.83 per cent, at $86.39 a barrel by 1314 GMT.

The front month US West Texas Intermediate (WTI) crude contract for May fell 66 cents, or 0.8 per cent, at $82.07 at 1314 GMT. The more active June contract was down 68 cents, or 0.83 per cent, to $81.42.

Explosions were heard in the Iranian city of Isfahan on Friday in what was described as an Israeli attack. Tehran played down the incident and said it did not plan to retaliate.

Investors had been closely monitoring Israel’s reaction to Iranian drone attacks on April 13 that were in turn a response to a presumed Israeli air strike on April 1 that destroyed a building in Iran’s embassy compound in Damascus.

In Delhi, finance ministry officials said they were keeping a close watch on the situation and indicated that they were ready to take adequate measures to protect India’s interests.

The Centre opted to buy cheap Russian crude after the West imposed sanctions following Moscow’s war against Ukraine in February 2022.

Analysts believe that a slight uptick in crude prices could occur but it would not impact India very much.

“In case the situation worsens between Israel and Iran, it may lead to a spike in crude prices. However, India still has a decent share of supply of Russian crude which comprises 30 per cent of India’s total imports by end FY24, and it should help to keep India’s import bills for crude oil under check,” said Hardik Shah, director, CareEdge Ratings.

Incidentally, the RBI has baked in a crude price assumption of $85 per barrel (Indian crude basket) during 2024-25 while making its real GDP growth forecast of 7 per cent.

Some analysts believe that any flare up in tensions in West Asia could see the benchmark Brent touch $100 per barrel — a situation that could impact the country’s economic growth, push up inflationary pressure in the economy, and distort the balance of trade and current account deficit, putting pressure on the rupee.

With inputs from Reuters