NEW YORK (Reuters) - Oil futures jumped more than $2 a barrel Monday, rising to levels not seen since November 2014, as U.S. sanctions on Iran loom and a North American trade deal fosters growth.

FILE PHOTO: Pump jacks operate in front of a drilling rig in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford/File Photo

Brent futures LCOc1 settled at $84.98 a barrel, up $2.25, or 2.7 percent. In post-settlement trade, the contract continued to strengthen, rising to $85.45 a barrel, the first trade above $85 since November 2014. U.S. light crude futures CLc1 were up $2.05 a barrel at $75.30, the highest since November 2014.

The United States and Canada forged a deal on Sunday to salvage the North American Free Trade Agreement (NAFTA), a trilateral pact with Mexico.

Phil Flynn, an analyst at Price Futures Group in Chicago, said the NAFTA deal would boost oil prices because it “increases the growth prospects not only for Canada and the U.S., but for North America as a whole.”

Investors have loaded up on options that give the holder the right to buy Brent at $90 by the end of October. Open interest in call options at $90 has risen by nearly 12,000 lots in the past week to 38,000 lots, or 38 million barrels.

Exchange data show hedge funds’ combined net long position in Brent and U.S. light crude futures and options at its largest since late July, equivalent to about 850 million barrels. [CFTC/] [O/ICE]

Higher oil prices and a strong U.S. dollar could hit demand growth next year, analysts said. For now the market is focused on U.S. sanctions on Iran, which take effect on Nov. 4 and are designed to cut crude exports from the No. 3 producer in the Organization of the Petroleum Exporting Countries.

“Iran has attempted to downplay the impact of looming U.S. sanctions by claiming that it has no intention of reducing oil production. However, such optimistic claims are falling on deaf ears,” PVM Oil Associates strategist Stephen Brennock said.

Several major buyers in India and China have signaled that they will cut purchases of Iranian oil. China's Sinopec 600028.SS said it halved loadings of Iranian oil in September.

“If Chinese refiners do comply with U.S. sanctions more fully than expected, then the market balance is likely to tighten even more aggressively,” Emirates NBD analyst Edward Bell wrote in a note.

U.S. President Donald Trump spoke to Saudi King Salman on Saturday on ways to maintain sufficient supply.

“Even if they (Saudi Arabia) wanted to bend to President Trump’s wishes, how much spare capacity does the kingdom have?” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

With about 1.5 million barrels per day of Iranian oil expected to go offline on Nov. 4, prices could “rocket higher with the flashy $100 per barrel price tag indeed a reasonable-sounding target”, he said.