SINGAPORE - Oil prices edged up on Wednesday on expectations of tighter markets once U.S. sanctions target Iran's petroleum industry from next month, although a strong dollar and rising U.S. crude supply curbed gains.
Brent crude oil futures were at $84.89 per barrel at 0646 GMT, up 9 cents from their last close.
U.S. West Texas Intermediate (WTI) crude futures were up 7 cents at $75.30 a barrel.
Traders said global oil markets remained tense because of the looming U.S. sanctions against Iran's oil exports, which kick in from Nov. 4.
Brent and WTI earlier this week both reached levels last seen in November 2014, and the two contracts have risen by around 20 and 17 percent respectively since mid-August.
Despite this, traders said prices were held back by a strong dollar which makes oil imports more expensive for countries using other currencies domestically, as well as by climbing supply in the United States.
U.S. commercial crude inventories rose by 907,000 barrels in the week to Sept. 28 to 400.9 million, the private American Petroleum Institute (API) said on Tuesday. Refinery crude runs fell by 158,000 barrels per day (bpd), API data showed.
Official weekly government data is due from the Energy Information Administration (EIA) on Wednesday.
Traders said the rising stocks were partly due to a relentless increase in U.S. crude oil production, which has jumped by a third since mid-2016 to a record 11.1 million bpd.
"We expect U.S. crude production to exit the year at 11.3 million bpd," Barclays bank said in a note on Tuesday.
That would mean the United States challenges Russia as the world's biggest crude oil producer.
On the demand side, fuel consumption is strong, growing especially fast in Asia's emerging economies.
However, high crude prices, combined with widespread emerging market currency weakness, threaten growth.
"That oil prices are rising to elevated levels at the same time as emerging market currencies hit record lows will be a flashing signal to OPEC members that demand may be at risk of a sharp correction," said Emirates NBD bank.