Oil prices break $80 a barrel mark as Total mulls pulling out of its Iran deal
Oil prices climbed above $80 a barrel yesterday for the first time since November 2014, hitting new multi-year highs on concerns that Iranian exports could fall because of renewed US sanctions, reducing supply in an already tightening market.
The market continued to push higher as geopolitical concerns drove trading.
Rising energy costs, if sustained, will push up costs across the economy.
"We are going to have reduced supplies from Iran in six months and Venezuela hasn't shown that they can stop the drop in their supplies," said Gene McGillian, vice president of research at Tradition Energy.
Brent crude futures reached an intraday high of $80.33 a barrel before receding.
US West Texas Intermediate (WTI) crude futures were up 41 cents at $71.90 after also hitting their highest since November 2014, at $72.30 a barrel.
US President Donald Trump's decision this month to withdraw from an international nuclear deal with Iran and revive sanctions that could limit crude exports from Opec's third-largest producer has boosted oil prices.
France's Total warned on Wednesday that it might abandon a multibillion-dollar gas project in Iran if it could not secure a waiver from US sanctions, casting further doubt on European-led efforts to salvage the nuclear deal.
A rapid decline in Venezuela's crude production has further roiled markets in recent months.
"The geopolitical noise and escalation fears are here to stay," said Norbert Rücker, head of macro and commodity research at Swiss bank Julius Baer. "Supply concerns are top of mind after the United States left the Iran nuclear deal."
Global inventories of crude oil and refined products dropped sharply in recent months owing to robust demand and to Opec-led production cuts.
Oil stocks were expected to drop further as the peak summer driving season nears, offsetting increases in US shale output, Bernstein analysts said.
Several banks have raised their oil price forecasts in recent days, citing tighter supplies and strong demand.