Oil prices, trading at multiweek highs in recent sessions, cooled on Tuesday, although heightened tensions between the U.S. and Iran remained front of mind for the energy market.

Oil did climb up from the day’s deepest losses, a mild recovery that traders pinned on underlying optimism for a break in the trade stalemate between President Trump and China’s Xi.

August West Texas Intermediate crude

CLQ19, -0.66%

fell 33 cents, or 0.6%, to $57.57 a barrel on the New York Mercantile Exchange. The contract wrapped up trading Monday at $57.90, the highest front-month contract finish since May 29, according to Dow Jones Market Data. Prices rose 8.8% for last week, the biggest weekly percentage climb since the week ended Dec. 2, 2016.

Read: Here’s what’s at stake for oil as the Iran-U.S. tensions escalate

The hefty climb for U.S. prices last week and to start this week came on the heels of expectations that Middle East tensions may lead to a disruption in the oil markets. Oil bulls had also cheered signs that economy-boosting central bank policy would be delivered this year.

Iran on Tuesday sharply criticized new U.S. sanctions targeting the Islamic Republic’s supreme leader and other top officials, saying the measures spell the “permanent closure” for diplomacy between the two nations, the Associated Press reported. For his part, Iran’s president described the White House as “afflicted by mental retardation.” President Hassan Rouhani went on to call the sanctions against Supreme Leader Ayatollah Ali Khamenei “outrageous and idiotic,” especially as the 80-year-old Shiite cleric has no plans to ever travel to the United States.

From Israel, Trump’s national security adviser John Bolton said talks with the U.S. were still possible and that the U.S. is leaving an “open door” for Iran to walk through.

“Investors appeared more preoccupied with profit taking… as the thought the U.S. would scale back its Gulf Naval presence reduces the chance of an accident or even a rogue policy mistake,” said Stephen Innes, managing partner at Vanguard Markets. “So while things look calm on the surface, there’s undercurrent tension building around targeting sanctions on the Supreme Leader as it’s more likely to provoke Iran hardliners and proxies.”

International benchmark August Brent crude

BRNQ19, -0.82%

 slipped 40 cents, or 0.6%, at $64.46 a barrel on ICE Futures Europe. The contract has traded in choppy fashion since it wrapped trading Friday at $65.20 — the highest since May 30. Front-month Brent logged a more than 5% gain last week.

The Trump administration has turned up the economic pressure on Tehran since Trump pulled the U.S. out of the 2015 nuclear deal in May 2018, hoping to drive Iran to accept a tougher agreement that would end uranium enrichment and curb its regional ambitions. The U.S. is seeking ultimately to drive the Islamic Republic’s oil exports to zero to prompt the nuclear concessions.

Washington has blamed Iran for attacks on tankers, which Tehran denied. Iran downed a U.S. drone and has threatened to violate some terms of the 2015 pact.

Meanwhile, the Organization of the Petroleum Exporting Countries and its allies will hold meetings on July 1-2. The session was originally scheduled for June 25-26.

“The market is largely expecting that OPEC+ will continue” with current production caps in the second half of the year, ING analysts said in a note. “This is something that a number of OPEC members, including Saudi Arabia, have stated that the market needs,” they said. Russia is perhaps the biggest unknown in the mix, so statements out of Moscow will be closely scrutinized.

The impetus behind delaying the meeting of OPEC and its closes allies is a wait-and-see approach. OPEC officials want to see the outcome of the Group of 20 summit first, and they hope Trump and China President Xi, meeting for a bilateral as part of the Osaka conference, can make some progress on a trade deal, analysts have said.

Read: OPEC braces for ‘critical’ meeting at a particularly volatile time for oil

Also on Nymex, July gasoline

RBN19, -0.31%

 slipped 0.3% to $1.85 a gallon. Futures prices for the fuel marked their highest settlement Friday, at $1.8561, since late May and logged a weekly rise of 7.1%.

July heating oil

HON19, -0.70%

 fell 0.6% at $1.8978a gallon. July natural gas

NGN19, -0.69%

 traded at $2.294 per million British thermal units, down 0.4%.

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2019-06-25