Oil prices reach two-year high as Iranian tensions panic market

Political unrest in Iran helped oil hit its highest price in more than two years on Thursday as OPEC-led output cuts and cold weather in North America boosted demand for the fossil fuel.

Week long anti-government protests in OPEC's third-largest oil producing nation raised concerns over future supply risks, adding a geopolitical premium to oil prices even though the nation's production and exports had not been affected.

Front month Brent crude futures were down to $67.83 a barrel shortly after midday, but had traded as high as $68.27 earlier in the day, and US West Texas Intermediate rose $0.15 to $61.78, reaching its highest mark since May 2015.

"There is enough support for prices with the cold in the US and the geopolitical factor," said Olivier Jakob, an oil analyst at Petromatrix.

Cold weather in the US has caused short-term demand across the Northern Hemisphere, especially for heating oil.

Analysts at JBC Energy said the price rise as a result of the Iranian unrest was an overreaction, while Swiss bank Julius Baer said prices painted "an overly rosy picture", putting the market at risk of profit-taking.