Benchmark oil contract Brent North Sea briefly surged above $80 a barrel Thursday, hitting its highest level since late 2014 and extending a recent run higher fuelled by tight supply concerns.
European stock markets meanwhile rose as the euro weakened against the dollar, but Wall Street pulled back in early New York trading.
Brent North Sea crude for delivery in July jumped to $80.18 a barrel in the late European morning — the highest level since November 2014 — after a gain of more than one percent compared with Wednesday’s close.
By mid-afternoon, it had pulled back to $79.65, still 37 cents higher from Wednesday.
Global oil supplies could be hit by President Donald Trump’s decision to pull the United States out of the Iran nuclear deal, and also by falling production in crisis-hit Venezuela, the International Energy Agency said on Wednesday
Iran has meanwhile said that Chinese state-owned oil company CNPC will replace Total on a major gas field project in the country should the French energy giant pull out over renewed US sanctions against Tehran.
Prior to Thursday’s oil-price rally, crude futures had already been rising strongly thanks to steady demand growth and a landmark deal by oil-producing countries, both inside and outside the OPEC cartel, to lower output.
Oil’s rise could meanwhile further push up inflation, impacting growth by quickening the pace of expected rises for interest rates.
“Clearly the recent rise in oil prices is going to pose a problem for some central banks due to the temporary impact it will have on the inflation data, especially when you consider that in the past year, Brent crude prices are up more than 50 percent,” Craig Erlam, senior market analyst at Oanda trading group, told AFP.
“The biggest test may come in countries that are already seeing the target or above target inflation like the UK.”
On currency markets, the dollar benefited from bets on higher US rates, keeping it around multi-month highs against its major peers.