Oil slipped on Friday following an earlier price spike of more than $3 after Iran played down reported Israeli attacks on its soil, in a sign that an escalation of hostilities in the Middle East might be avoided.

Brent futures were down 48 cents, or 0.6%, at $86.63 a barrel by 1155 GMT. The most active U.S. West Texas Intermediate contract was down 38 cents, or 0.5%, to $82.35.

Explosions were heard in the Iranian city of Isfahan on Friday in what sources described as an Israeli attack, but Tehran played down the incident and indicated it had no plans for retaliation in a response that could ease concerns about escalation into a region-wide war.

Iran struck Israel with a barrage of drones and ballistic missiles on Saturday in retaliation for a presumed Israeli air strike on April 1 that destroyed a building in Iran’s embassy compound in Damascus and killed several top Iranian officers.

“Whilst the initial spike in oil may have highlighted the initial fear of further escalation, we have seen both equities and crude reverse some of those preliminary moves,” said Joshua Mahony, chief market analyst at Scope Markets.

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