Oil prices drop as traders assess the risks of a broader conflict in the Middle East.

US markets sharply declined as technology stocks led the fall amid rising Treasury bond yields.

Oil prices weakened and US stocks sharply fell this Monday following Iran’s military attack on Israel, as markets assessed the risk of the conflict escalating into a full-scale war that could disrupt energy supply in the region.

Brent crude, the international oil benchmark, dropped 0.4% to $90.10 per barrel, slightly trimming earlier losses. West Texas Intermediate (WTI), the US marker, fell 0.3% to $85.41 per barrel.

The relatively muted reaction suggested that markets were betting on the consequences of the attack being contained after Iran stated it considered the matter “concluded,” and Washington attempted to de-escalate tensions.

Traders had been anxiously watching how the market would react after the Islamic Republic launched its first attack on Israel from its own territory on Saturday. Tehran sent drones and missiles to the Jewish state in retaliation for an alleged Israeli strike on its consulate in Damascus on April 1, which killed several military commanders.

US stocks came under pressure on Monday afternoon, reversing early session gains. The benchmark S&P 500 index on Wall Street fell 1.1%, while the tech-heavy Nasdaq Composite lost 1.6%.

Those movements among stocks traditionally sensitive to rates also occurred after US retail sales data for March came in better than expected, exacerbating fears that the world’s largest economy is still too hot to warrant interest rate cuts and triggering a sell-off in government bonds.

The yield on the 10-year Treasury rose by 0.14 percentage points to 4.64%, as the price of US government bonds fell.