Oil rises to $80 a barrel in London for first time since 2014

Oil rose to $80 a barrel in London for the first time since 2014 as US crude inventories fell and traders braced for the impact of renewed sanctions on OPEC member Iran.

Brent futures added as much as 1.1 percent to $80.18 on Thursday. US crude stockpiles slipped for a second week as the summer driving season approaches, government data showed on Wednesday. Goldman Sachs Group Inc. said America’s surging shale output won’t be able to replace the potential drop in Iranian oil shipments after the US reimposed sanctions on OPEC’s third-largest producer.

Crude has rallied this month to the highest level in more than three years after US President Donald Trump withdrew from a 2015 pact between Iran and world powers that had eased sanctions on the Islamic Republic in exchange for curbs on its nuclear program. While the International Energy Agency said a global glut’s been eliminated thanks to output curbs by OPEC, it warned high prices may hurt consumption and cut forecasts for demand growth.

“Supply concerns are top of mind after the US left the Iran nuclear deal,” said Norbert Ruecker, head of macro and commodity research at Julius Baer Group Ltd. in Zurich. “The geopolitical noise and escalation fears are here to stay.”

Brent for July settlement rose 66 cents to $79.94 a barrel on the London-based ICE Futures Europe exchange at 10:49 a.m. local time, after adding as much as 1.1 percent to $80.18 on Wednesday. The global benchmark crude traded at a $7.66 premium to WTI for July.

West Texas Intermediate crude for June delivery traded at $72.13 a barrel on the New York Mercantile Exchange, up 64 cents. The contract climbed 18 cents, or 0.3 percent, to $71.49 on Wednesday. Total volume traded was 33 percent above the 100-day average.

Futures for September delivery on the Shanghai International Energy Exchange gained 1.9 percent to 481.9 yuan a barrel, rising for a third day.

U.S. crude inventories fell 1.4 million barrels last week, while domestic production rose to 10.7 million barrels a day, the Energy Information Administration said on Wednesday. The specter of surging American output, which has topped 10 million barrels a day every week since early February, continues to place a cap on prices and undermine OPEC’s output cuts. Gasoline stockpiles also shrank last week by 3.79 million barrels, the EIA reported.

Members of the Organization of Petroleum Exporting Countries, including Saudi Arabia, Kuwait and the United Arab Emirates, said they have enough capacity to fill in any supply gap if renewed sanctions curtail Iran’s exports. Still, Goldman Sachs said the group won’t proactively replace the lost barrels, given its current narrative that the market isn’t fully re-balanced.