The White House put Iran “on notice” after Tehran conducted a ballistic missile test launch, but the oil markets haven’t shown any reaction to the threat on one of the world’s largest crude producers.

Late Wednesday, National Security Advisor Mike Flynn called Iran a “destabilizing influence” in the Middle East and said the U.S. was “officially putting Iran on notice.”

The warnings from U.S. government raises the potential for new U.S. sanctions against the nation, which is among the world’s top 10 oil producers, just over a year after the implementation of the Iran nuclear deal that is aimed at curtailing Tehran’s nuclear activities in return for easing of some sanctions by the West.

But the oil market showed little, if any, reaction. Futures prices for West Texas Intermediate crude CLH7, +0.30% touched highs above $54 a barrel in electronic trading after the comments, but ended lower Thursday on the New York Mercantile Exchange. Brent LCOJ7, +0.28% in the ICE Futures exchange in London managed to top $57 overnight, but also finished with a loss Thursday.

Prices have eased “as traders seem to have concluded that the dispute between the U.S. and Iran over a recent missile test represents more of a war of words than the start of a military confrontation that would put supplies from the wider Persian Gulf region at risk,” Tim Evans, energy futures specialist at Citi Futures and OTC Clearing said in a note Thursday.

On Twitter, President Donald Trump reiterated the warning early Thursday, saying Iran “should have been thankful for the terrible deal the U.S. made with them, and claiming that Iran was “on its last legs and ready to collapse until the U.S. came along.”

Administration officials said Trump has begun a process of reviewing current U.S. policy and is “considering a whole range of options,” including tougher sanctions. When asked if military force was also an option, the officials didn’t rule it out.

In response to the White House, Iran’s Foreign Ministry spokesman Bahram Qasemi said the missile tests weren’t in contradiction with the United Nations Security Council resolution, according to state-run news agency IRNA.

The news agency also said that Ali Akbar Velayati, senior adviser to Iranian Supreme Leader Ayatollah Ali Khamenei, told reporters that this wasn’t the first time that a “naive person” from the U.S. posed a threat to Iran.

Analysts have dismissed White House warning as just talk — for now.

James Williams, energy economist at WTRG Economics sees it as a “non-event in the oil market.”

“It does not have the specificity to move markets,” he said. And “Iran’s response is similar: If you impose sanctions, we will do something and it will invalidate the agreement.”

Late Thursday, Reuters reported that the U.S. is expected to impose sanctions on multiple Iranian entities as early as Friday, citing sources familiar with the matter. The sources also told Reuters that it would be done in a way that will not violate the Iran nuclear deal.

Again, oil prices showed little reaction, with futures prices for WTI oil prices trading at $53.70 a barrel in early evening trading, just above the $53.54 level they settled at for the session.

Source: MarketWatch