Oil prices hit their highest level since November 2014 on Thursday, with Brent crude creeping closer to $80 per barrel as supplies tighten and tensions with Iran simmer.

Brent crude futures rose 32 cents to $79.60 per barrel at 0846 GMT. US West Texas Intermediate (WTI) crude futures were up 29 cents at $71.78 a barrel. That was not far off Tuesday's $71.92 a barrel - also a level not seen since November 2014.

The prospects of a sharp drop in Iranian oil exports in the coming months due to renewed US sanctions following President Donald Trump's decision to withdraw from an international nuclear deal with Tehran has lifted oil prices in recent weeks.

France's Total had on Wednesday warned it might abandon a multi-billion-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.

“The geo-political noise and escalation fears are here to stay,” said Norbert RŶcker, Head of Macro & 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 due to robust demand and production cuts by the world's top producing countries.

Oil stocks were expected to drop further as peak summer driving season nears, offsetting increases in U.S. shale output, said analysts at Bernstein.

“While the sharp rise in US production and rig count has raised questions on the sustainability of inventory draws through 2018, we believe that inventories will continue to draw as we enter the summer driving season in 2018,” they said.

Several banks have in recent days raised their oil price forecasts, citing tighter supplies and strong demand.

Everything bullish?

But high oil prices could hit consumption, the International Energy Agency had warned on Wednesday, lowering its global oil demand growth forecast for 2018 to 1.4 million from 1.5 million barrels per day (bpd).

Asia's demand is at record highs and with rising prices its crude could cost $1 trillion this year, about twice what it paid during the market lull of 2015/2016.

The IEA said global oil demand would average 99.2 million bpd in 2018, although U.S. bank Goldman Sachs said consumption would cross 100 million bpd “this summer”.

Leading production increases is the United States, where crude output has soared by 27 per cent in the last two years, to a record 10.72 million bpd, putting the United States within reach of top producer Russia's 11 million bpd.

Goldman Sachs, though, said even with a slowdown in demand and soaring U.S. output, global oil markets would remain tight.

“US shale cannot solve the current oil supply problems,” it said, arguing that U.S. oil would not be sufficient to offset production losses from Iran, Venezuela and Angola.

Goldman also said the tight market left “room for OPEC to exit (its production cuts) without significant price impact.”

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