- Oil prices hit $80 a barrel for the first time since November 2014.
- Prices gave up gains in afternoon trade after rising on concerns that Iranian exports could fall.
- Fewer exports would reduce supply in an already tightening market.
Brent crude oil on Thursday topped $80 a barrel for the first time since November 2014, as the market grew concerned that the Trump administration's effort to sanction Iran's crude exports could be more successful than originally thought.
, the international benchmark for oil prices, hit a session high of $80.50 a barrel on Thursday, its strongest level since Nov. 24, 2014, when it topped out at $80.85. The contract eased back to $79.19 by 2:25 p.m. ET, down 9 cents.
U.S. West Texas Intermediate crude ended the day unchanged from the previous session at $71.49 a barrel. WTI earlier hit a high going back to Nov. 28, 2014 at $72.30 a barrel.
President Donald Trump announced last week he would withdraw the United States from the Iran nuclear deal and restore wide-ranging sanctions on Iran. His administration is gave companies 90 to 180 days to wind down current business with Iran subject to sanctions.
John Kilduff, founding partner at energy hedge fund Again Capital, chocked up oil's failure to hold earlier gains to traders taking profits off the table and "crisis fatigue."
"There was no new catalyst today, no new rhetoric from key players. This is what passes for relative calm these days," he said.
Still, he said the market is becoming convinced that Trump will be able to disrupt crude exports after his administration slapped sanctions on the head of Iran's central bank earlier this week.
"That showed that he's not kidding around. It's very much a forward-leaning, aggressive strategy against Iran," he said.
A debate had raged in the market over the effectiveness of the sanctions, largely because China and key U.S. allies in Europe still support the nuclear deal. While some analysts said sanctions could wipe 1 million barrels per day of Iranian crude off the market, others said the impact would be limited to fewer than 500,000 barrels a day.
The Trump administration ultimately took a tougher stance than many expected, restoring all sanctions that were in place prior to their suspension in 2016.
The European Union is exploring ways to protect the continent's companies, but the market is losing faith that Washington will issue sanctions waivers to the shippers, insurers and financial institutions necessary to bring Iranian oil to buyers, according to Kilduff.
French oil major Total said on Wednesday it will halt a multibillion-dollar investment natural gas development in Iran unless it receives a waiver from the U.S. government.
OPEC members can replace any supplies lost from Iran, and the United States is pumping at record levels, noted Anthony Grisanti, president and founder at GRZ Energy.
"I see a lot of this move being seasonal factors. Demand for products has been very strong," including gasoline and distillate, he told CNBC's "Futures Now."
"I wouldn't be surprised if this market didn't sell off after the Memorial Day holiday."
"The screws are really tightening on Venezuela," Dan Yergin, vice chairman of IHS Markit, told CNBC on Wednesday.
Also boosting the market, the U.S. Energy Information Administration reported on Wednesday that oil in storage in the United States fell more than expected, dropping by about 1.4 million barrels. Stockpiles of refined products like gasoline and distillates also fell.
The United States is approaching the summer driving season, when refineries typically draw down inventories to meet increased demand at the gas pump.
However, the Paris-based International Energy Agency on Wednesday warned that recent strength in demand for oil could soon moderate. The adviser to developed nations knocked down its 2018 forecast for growth in demand from 1.5 million barrels a day to 1.4 million barrels a day in its monthly report.
"While recent data confirms strong growth in 1Q18 and the start of 2Q18, we expect a slowdown in 2H18 largely attributable to higher oil prices," IEA said.
The agency also sees higher oil prices providing an incentive for U.S. drillers to pump more crude. It raised its expectation for U.S. oil output growth for 2018 by 120 thousand barrels a day.
The United States is now pumping more than 10.7 million barrels a day, according to the latest preliminary weekly reading from EIA. The nation's drillers are quickly closing in on top producer Russia, which pumps about 11 million barrels a day.
Correction: This story has been corrected to reflect U.S. oil production is more than 10.7 million barrels a day, according to weekly government figures.