HOUSTON (Reuters) - Oil futures rose on Tuesday as Middle East tensions and OPEC supply cuts kept global benchmark Brent crude above $64 a barrel, while gains were limited by the U.S.-China trade dispute that has dragged on the global economy and crimped oil demand.

FILE PHOTO: The sun sets behind an oil pump outside Saint-Fiacre, near Paris, France March 28, 2019. REUTERS/Christian Hartmann

OPEC and allied producers led by Russia agreed last week to extend their supply-cutting deal until March 2020. Brent has risen almost 20% in 2019, supported by the pact and tensions in the Middle East, especially the row over Iran’s nuclear program.

Brent settled up 5 cents to $64.16. U.S. West Texas Intermediate crude settled up 17 cents to $57.83.

Supporting prices was an Iranian military official’s comments that Britain’s seizure last week of an Iranian oil tanker off the coast of Gibraltar will not be “unanswered,” according to the semi-official Tasnim news agency.

“Iranian military talking about payback for the Gibraltar situation has put a little bid in the market here,” said Robert Yawger, director of energy futures at Mizuho in New York.

Rising tensions have brought Iran and the United States close to conflict. The European Union on Tuesday urged Iran to reverse its scaled up uranium enrichment that breaches a nuclear deal it agreed in 2015 with world powers. Washington withdrew from the accord last year and re-imposed sanctions.

“The market is still caught between concerns of slowing growth and high geopolitical risk with Iran,” said Phil Flynn, an analyst at Price Futures Group in Chicago.

Price gains were capped by the U.S.-China trade war that has dampened prospects for global economic growth.

The world’s two largest oil consumers are set to relaunch trade talks this week, although there are few signs their differences have narrowed.

In its monthly forecast on Tuesday, the U.S. Energy Information Administration (EIA) cut its 2019 world oil demand growth forecast by 150,000 barrels per day to 1.07 million bpd.

It attributed the revision to lower-than-expected global fuel consumption and weakening economic growth, citing “increasing uncertainty” and “increasingly weak global economic signals.”

“It’s because of trade wars and tariffs,” said Andy Lipow, president of Lipow Oil Associates in Houston. “There has been no progress in the U.S.-China trade dispute. The EIA sees these things and revises downward their forecast accordingly.”

In recent months, the economic slowdown has influenced prices more than supply cuts following U.S. sanctions on Venezuela and Iran, OPEC’s extension of its oil pact to the first quarter of 2020 and larger-than-expected output reductions by Saudi Arabia, the EIA said.

It was the sixth consecutive month that the EIA revised its 2019 demand forecast.

Russian oil output fell close to a three-year low in early July, industry sources told Reuters. This follows discovery of contaminated Urals crude that affected the Druzhba pipeline to Europe.

“The Russian story definitely supports prices today. ... lower Russian output together with elevated compliance from OPEC nations should rebalance the oil market faster,” said Giovanni Staunovo, oil analyst for UBS.

The markets also gained support from forecasts that U.S. crude stockpiles fell 3.1 million barrels last week, which would be their fourth straight weekly decline. The first weekly supply report is due at 4:30 p.m. EDT (2030 GMT) from the American Petroleum Institute, an industry group, followed by the EIA on Wednesday morning.

However, the EIA raised its outlook for U.S. crude oil production, projecting an all-time high of 12.36 million bpd in 2019, versus its forecast last month of 12.32 million bpd.