NEW YORK - Oil prices rose about 2 percent on Friday with U.S. crude hitting its highest in more than three years as global supplies remained tight and the market awaited news from Washington on possible new U.S. sanctions against Iran.
The May 12 deadline for announcements on potential new U.S. sanctions on Iran bolstered the market, said Bob Yawger, director at Mizuho.
"You have the May 12 Iran and Trump headlines that support the market," he said.
U.S. light crude was $1.45 higher at $69.88 per barrel by 12:18 p.m. EDT (1718 GMT), after touching a session high of $69.97, its highest since November 2014. It was on track to gain just over 1.5 percent on the week.
Brent crude oil was up $1.35 at $74.98 a barrel. The global benchmark hit a 3-1/2-year closing high of $75.17 on Monday. The contract was set to end the week up 0.4 percent.
Investors are concerned that sanctions against Iran could cut oil supplies.
Iran's foreign minister said on Thursday that U.S. demands to change its 2015 nuclear agreement with world powers were unacceptable as a deadline set by President Donald Trump for Europeans to "fix" the deal loomed.
Trump has said that unless European allies rectify the "terrible flaws" in the international accord by May 12, he will refuse to extend U.S. sanctions relief for the oil-producing Islamic Republic.
European powers still want to hand Trump a plan to save the Iran nuclear deal next week. But they have also started work on protecting EU-Iranian business ties if the U.S. president makes good on a threat to withdraw.
Iran resumed its role as a major oil exporter in January 2016 when international sanctions against Tehran were lifted in return for curbs on Iran's nuclear programme.
Aside from security concerns, growing U.S. crude supplies are capping price gains.
Surging production in the Permian shale basin is outpacing pipeline capacity, while local refining issues have exacerbated oversupply in the region.
The United States now produces more crude oil than top exporter Saudi Arabia.
U.S. inventory builds have been bearish for the past two weeks, limiting the markets upside. The weekly rig count from Baker Hughes, an indicator of forward-looking production, is scheduled to be released at 1 p.m. on Friday.
ANZ analysts Daniel Hynes and Soni Kumari said Brent could reach $80 a barrel by the end of this year, attributing recent strength to rising geopolitical risks and tighter global supply.
"We expect the market to tighten even further in second half 2018," they wrote in a note to clients.