Trump last year abandoned Iran’s 2015 nuclear deal with world powers, arguing that he wanted a bigger deal that not only limited Iran’s atomic work, but also reined in its support for proxies in Syria, Iraq, Yemen and Lebanon, and curbed its ballistic missile program. Trump also tightened sanctions on Iran in May to try to choke off its oil exports. “Now the market is pondering the possibility that we’ll see a flood or Iranian oil come onto the market if there’s progress made,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “We have to be admittedly cautious because we’ve heard of deals one minute only to be tweeted down the next minute.”

Buoying prices, Trump said after a G7 summit of world leaders in Biarritz, France, that he believed China was sincere about wanting to reach a deal. Chinese Vice Premier Liu He, who has been leading the talks with Washington, said China was willing to resolve the dispute through “calm” negotiations and opposed any increase in trade tensions. Oil prices have fallen about 20% from a 2019 high reached in April in part because of worries that the U.S.-China trade conflict is hurting the global economy, which could dent demand for oil. China’s Commerce Ministry said last week it would impose additional tariffs of 5% or 10% on a total of 5,078 products originating from the United States, including crude oil, agricultural products and small aircraft. In retaliation, Trump said he was ordering U.S. companies to look at ways to close operations in China and make products in the United States.

SEB analyst Bjarne Schieldrop said the oil market was worried about “the secondary global growth effects of an upwards spiraling trade war between China and the U.S..” “The second concern for the oil market is that … China is now ready to wrestle with the U.S. in the global space of oil.