Oil prices hold firm as U.S. weighs added sanctions on Iran oil exports after attack on Israel

• U.S. officials told NBC News they expect an Israeli response to Iran’s attack to be limited in scope.
• Israeli army chief Herzi Halevi said, “Iran will face consequences for its actions.”
• The leaders of Britain, France and Germany have called on Israel to show restraint in the wake of the Iranian attack.

Motorists drive their vehicles past a billboard depicting named Iranian ballistic missiles in service, with text in Arabic reading

Crude oil futures held steady Tuesday as the U.S. prepares new sanctions against Iran that could target the country’s oil exports in the wake of the Islamic Republic’s weekend air assault against Israel.

The West Texas Intermediate contract for May delivery fell slightly by 5 cents to settle at $85.36 a barrel. The June Brent futures contract lost 8 cents to settle at $90.02 a barrel.

“Clearly, Iran is continuing to export some oil,” Treasury Secretary Janet Yellen said Tuesday. “There may be more that we could do. I don’t want to preview our actual sanctions activities, but certainly that remains in focus as a possible area that we could address.”

The oil market’s response to Iran’s attack has been muted so far, with futures closing lower Monday after Israel and the U.S. successfully repelled the assault. Fears of a wider war have also eased as the U.S. expects an Israeli response to Iran’s attack to be limited in scope, four U.S. officials told NBC News.

“Tensions are high, and either party’s next moves are hard to predict, but all the significant signs point toward an easing of hostilities and restraint in the short term,” said Jorge Leon, senior vice president at Rystad Energy, a consulting firm.

Israel’s wartime Cabinet met for several hours Monday to weigh how Israel should respond. An Israeli official told NBC News after the meeting that a response may be “imminent.”

“Iran will face consequences for its actions,” Israeli army chief Herzi Halevi said in a video statement. Halevi in the video also thanked the U.S., Britain and France for assisting Israel in shooting down more than 300 missiles and drones launched at the country.

“We will choose our response accordingly,” Halevi said. “The IDF remains ready to counter any threats from Iran and its terror proxies as we continue our mission to defend the state of Israel.”

The leaders of Britain, France and Germany have called on Israel to show restraint in the wake of the Iranian attack. President Joe Biden told Prime Minister Benjamin Netanyahu over the weekend that the U.S. commitment to Israel is ironclad, but Washington will not participate in an offensive operation against Iran, a senior administration official told NBC News.

U.S. Secretary of State Antony Blinken has consulted with Egypt, Jordan, Turkey, Saudi Arabia, Germany and the U.K. since the Iranian attack, State Department Spokesperson Matthew Miller told reporters Monday.

“We continue to make clear to everyone that we talked to that we want to see de-escalation, that we don’t want to see this conflict further escalated. We don’t want to see a wider regional war,” Miller said.

The spokesman for the Iranian Armed Forces said the Islamic Republic does not seek to expand the war but warned that Tehran would respond stronger than before if Israel seeks a counterattack, according to a translated post on the Islamic Republic’s social media page.