Oil jumps 3 percent after USA quits Iran deal, United States stock drawdown

An oil pump is seen at sunset outside Vaudoy-en-Brie

Oil extended gains above $71 a barrel as a conflict between Israel and Iran ratcheted up, increasing prospects for tighter global supply after the US renewed sanctions on OPEC's third-largest producer.

Brent reached $78 a barrel on Thursday, its highest since November 2014, two days after President Donald Trump said the USA was abandoning an global nuclear deal with Iran and would impose new sanctions.

The latest financial sanctions will affect Iran's basic ability to conduct trade and make it hard for other parties to the 2015 agreement - France, Britain, Germany, Russia and China - to keep the agreement alive, if they want continued unobstructed access to USA financial institutions.

By around 8.20 a.m. BST (3.20 a.m. ET) Brent crude, the global oil benchmark, was up 0.4% to trade at $77.66 per barrel, reaching a high not seen since November 2014. On Thursday Brent hit $78, its highest since November 2014.

They expect West Texas Intermediate, the most commonly cited USA contract, to trade $6 below the price of Brent in 2019.

Gasoline prices in Fresno already increased beyond $4 per gallon this week at some places in town. These days, that national average has jumped to $2.81 per gallon.

Crude stocks at the Cushing, Oklahoma, delivery hub rose 1.4 million barrels, EIA said.

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Weekly US crude oil production hit another record last week, climbing to 10.7 million barrels per day (bpd).

That is up 27 percent since mid-2016 and means that USA output is creeping ever closer to that of top producer Russian Federation, which pumps about 11 million bpd.

As part of the supply deal, OPEC pledged to cut 1.2 million bpd from supplies from its members.

United States bank Goldman Sachs said renewed sanctions and risks to supplies elsewhere, especially in Venezuela, meant there was a high possibility of higher prices than the bank's summer Brent price forecast of $82.50 per barrel.

Three of the main providers of cover to Iran's main tanker fleet - Skuld, the Swedish Club and West of England Club - said they didn't want to give any further guidance beyond what they published on their websites, saying the situation remains fluid.

The Opec has a deal with Russian Federation and non-opec producers to cut supplies that has helped erase a global glut and boosted oil prices to their highest since 2014. Saudi Arabia signaled it could make up lost supplies, and Goldman Sachs Group Inc. said there's a chance prices may exceed its forecast.

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