Oil prices near 2014 highs as Iran tensions keep market on edge

* Brent just under $75/b, WTI at almost $70/b

* U.S. deadline over Iran looms on May 12

* Highest U.S. oil drilling since 2015 holds market back

SINGAPORE, May 7 (Reuters) - Oil markets held firm on Monday, with prices near late-2014 highs as a decision looms on whether the United States walks away from a deal with Iran and instead re-imposes sanctions on Tehran.

Brent crude oil futures were at $74.94 per barrel at 0035 GMT, up 7 cents, or 0.1 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were also up 7 cents, or 0.1 percent, at $69.79 per barrel.

The slightly rise in prices came after WTI on Friday hit its highest level since November 2014.

“Crude oil prices pushed higher as concerns over the impact of the U.S. pulling out of the Iran nuclear deal continue to drive investor sentiment,” ANZ bank said on Monday.

“The big story this week is going to be about oil and the Iran Nuclear deal. We know President Trump doesn’t like it,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

“All in all, the bets are – based on the price action in oil – that President Trump does withdraw from the deal,” he added.

Iran re-emerged as a major oil exporter in 2016 after international sanctions against it were lifted in return for curbs on Iran’s nuclear programme.

The United States has since then, however, expressed doubts over Iran’s sincerity in implementing those curbs.

Trump has threatened to walk away from the 2015 agreement by not extending sanctions waivers when they expire on May 12, which would likely result in a reduction of Iran’s oil exports.

Some traders, however, are becoming cautious about ever higher oil prices.

Hedge funds cut their net long U.S. crude futures and options positions in the week to May 1, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday, reducing their exposure to positions that would profit from further crude price rises by 11,825 contracts to 444,060.

Looming over markets is surging output from the United States, where crude production C-OUT-T-EIA has soared by more than a quarter in the last two years, to 10.62 million barrels per day. Only Russia produces more, at around 11 million bpd.

U.S. output will likely rise further this year, towards or past Russia’s levels, as its energy firms keep drilling for more.

U.S. energy companies added nine oil rigs looking for new production in the week to May 4, bringing the total count to 834, the highest level since March 2015, energy services firm Baker Hughes said last Friday.

Reporting by Henning Gloystein; editing by Richard Pullin