Benchmark oil contract Brent North Sea hit US$80 a barrel on May 17, for the first time since late 2014, extending a recent run higher fuelled by tight supply concerns. AFP

LONDON: Benchmark oil contract Brent North Sea hit its highest level since late 2014 on Thursday, breaching US$80 per barrel, with some market players predicting it could rise all the way to US$100.

Higher oil prices, in turn, pushed the shares of energy firms in European stock markets higher, helping London’s FTSE to set a new all-time high, and the Paris CAC to establish a fresh 2018 peak.

Wall Street recovered from early weakness to show small gains in late morning in New York.

Brent North Sea crude for delivery in July jumped to US$80.50 in European afternoon trading, the highest level since November 2014, posting a gain of more than 1.3 percent from Wednesday.

By the end of the day it had pulled back to US$80.33, still US$1.05 up from Wednesday.

The CEO of French oil giant Total said Thursday he “wouldn’t be surprised to see US$100 per barrel” in the coming months.

“We are in a new world. We are in a world where geopolitics are dominating the market again,” Patrick Pouyanne said at an event held by a Washington think tank.

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.

“The catalyst for the latest move appears to be more concerns about the state of the supply and demand balance and OPEC’s apparent unwillingness to do anything about it, even as Iran faces fresh sanctions and Venezuelan production is pressured,” said Greg McKenna, an analyst at AxiTrader.

Prior to Thursday’s oil-price rally, crude futures had already risen thanks to steady demand growth and a landmark production cut deal.

Oil’s rise could meanwhile further push up inflation, impacting growth by quickening the pace of expected increases in 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 target or above target inflation like the UK.”

With markets expecting inflation to pick up pace, including for other reasons such as improved wages growth, 10-year US bond yields have hit seven-year highs, adding to expectations of a series of US rate hikes this year.

On currency markets, the dollar benefited from bets on higher US rates, keeping it around multi-month highs against its major peers.

The greenback is holding at 2018 highs against the euro, also as horse-trading to form an Italian government fuels uncertainty in one of the eurozone’s biggest economies.

A string of disappointing data on the economic bloc is also bearing down on the single currency.

In Milan, shares in Banca Monte dei Paschi di Siena, the world’s oldest bank, fell nine percent after the anti-establishment Five Star Movement and the far-right League said that after forming a government they wanted to “redefine its mission.”

In Copenhagen, shares in shipping giant Maersk dropped close to nine percent after the company reported weak results and an uncertain outlook for the rest of the year.

Oil - Brent North Sea: UP US$1.05 at US$80.33 per barrel

Oil - West Texas Intermediate: UP 51 cents at US$72.00 per barrel

London - FTSE 100: UP 0.7 percent at 7,787.97 points (close)

Frankfurt - DAX 30: UP 0.9 percent at 13,114.61 (close)

Paris - CAC 40: UP 1.0 percent at 5,621.92 (close)

EURO STOXX 50: UP 0.8 percent at 3,591.32

New York - Dow: UP 0.1 percent at 24,798.73

Tokyo - Nikkei 225: UP 0.5 percent at 22,838.37 (close)

Hong Kong - Hang Seng: DOWN 0.5 percent at 30,942.15 (close)

Shanghai - Composite: DOWN 0.5 percent at 3,154.28 (close)

Euro/dollar: DOWN at US$1.1791 from US$1.1808 at 2100 GMT

Pound/dollar: UP at US$1.3509 from US$1.3491

Dollar/yen: UP at 110.86 yen from 110.34 yen --AFP

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