For a third day, oil declined, wiping out most of the surge which it had seen following the attack on Israel by Hamas fighters over the weekend.

Following a report in the New York Times which said Iran appeared to have been surprised by the attack on Israel, West Texas Intermediate dropped, toward $83 per barrel, falling 2.7% throughout Wednesday’s trading. The appearance that Iran might lack culpability in the attacks increased the chances the conflict will not spread to the Islamic Republic, and affect Iran’s crude production output, which many traders see as a vital supply in todays tight market.

In Washington, President Joe Biden condemned those who would offer a justification for the attacks by Hamas, calling it “unconscionable” to downplay the atrocities committed in the attacks. As Secretary of State Anthony Blinken is heading to Israel to demonstrate the United States’ support for the new unity government, the Biden administration is weighing the option of re-freezing $6 billion in Iranian funds which it had just unfrozen as part of the prisoner swap. Meanwhile Israel is preparing a major ground invasion into Gaza as an estimated hundred hostages have been spread out throughout the city.

Vishnu Varathan, Asia head of economics and strategy for Mizuho Bank Ltd. in Singapore said there remains, “a latent risk of a geopolitical flare-up in oil. Reassurances of the Israel-Hamas war not impacting oil supply are highly conditional on the conflict not spilling over, and there is just simply no guarantee of this.”

The gains in crude this week were tempered by a statement by OPEC+ leader Saudi Arabia, made on Tuesday, in which the kingdom reiterated support for the cartel’s efforts to balance the oil markets. Pressures on the market have also been eased by record high US production, as well as a potential deal between the US and Venezuela. easing fears over the tightness in the global supply which had fueled a price rally last quarter.

According to people familiar with the data, the American Petroleum Institute reported a large increase in nationwide stockpiles in the US. However after registering a small increase last week, inventories at the vital Cushing, Oklahoma hub resumed their decline toward critically low levels.

The official data will be released Thursday, along with the monthly oil market report from OPEC and the International Energy Agency’s report.