Oil prices inch down but supported by Iran concerns

By Shadia Nasralla

LONDON (Reuters) - Oil prices edged lower on Friday as the dollar rose, but Brent was still headed for a third week of gains amid supply concerns should the United States reimpose sanctions on Iran.

Global benchmark Brent crude futures were down 23 cents at $74.51 a barrel at 1351 GMT. This month, Brent hit highs above $75, a level last seen in late 2014.

U.S. West Texas Intermediate (WTI) crude fell 39 cents to $67.80 a barrel. This month, WTI has gained around 4.5 percent.

U.S. President Donald Trump will decide by May 12 whether to reimpose sanctions on Iran that were lifted as part of an agreement with six other world powers over Tehran's nuclear programme.

Brent has risen by around 6 percent this month on expectations of renewed sanctions, which would likely dampen Iranian oil exports. The gains came despite a higher dollar, which is at its strongest since Jan. 11 against a basket of currencies.

Increases in the U.S. currency make dollar-priced oil more expensive for holders of other currencies.

"All we're seeing is very strong pricing and the slight softening is primarily due to a stronger dollar," said Bjarne Schieldrop, SEB chief commodity analyst.

"I don't think oil is actually taking a breather."

Concerns about market tightness have also been fuelled by the deteriorating political and economic situation in Venezuela that has led to a 40 percent decline in crude output in the past two years.

Price increases have been capped by rising U.S. production as shale drillers ramp up activity, underpinning a widening discount between Brent and WTI, which hit its largest since Dec. 28.

Surging U.S. production, which rose to 10.59 million barrels per day last week, has encouraged record-high U.S. exports.

(Additional reporting by Aaron Sheldrick in Tokyo; Editing by Jason Neely and Mark Potter)