Oil hits highest since 2015 as Iran unrest spooks market

* Brent touches $68.27, highest since May 2015

* Iran deploys Revolutionary Guards to quell "sedition"

* Analyst says market vulnerable to profit-taking

* EIA says U.S. crude inventories fall; distillate stocks rise (New (KOSDAQ: 160550.KQ - news) throughout, updates prices, market activity and comment, adds U.S. inventory figures; new byline, changes byline, dateline, previous LONDON)

By David Gaffen

NEW YORK, Jan 4 (Reuters) - Oil rose on Thursday to its highest since May 2015 on concern about supply risks due to unrest in Iran and additional support from OPEC-led output cuts and demand-boosting cold weather in the United States.

U.S. oil stocks fell more than expected, continuing a steady drawdown of supplies in the world's largest oil consumer, though stocks of distillates and gasoline rose on heavy refining activity driven in part by year-end adjustments.

Anti-government protests since last week in OPEC's third-largest producer have added a geopolitical risk premium to oil prices, though Iran's production and exports have not been affected.

Brent crude, the international benchmark, rose 5 cents to $67.89 a barrel as of 11:43 a.m. EST (1643 GMT) after hitting a high of $68.27 earlier in the session. U.S. crude rose 32 cents to $61.95 and also touched $62.21, its highest since May 2015.

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

U.S. crude stocks fell by 7.4 million barrels in the last week of 2017, exceeding expectations, as refiners boosted activity to their highest rate since 2005, the Energy Information Administration said on Thursday.

Freezing weather in the United States has spurred short-term demand, especially for heating oil.

Apart from the spike in May 2015, oil is trading at its highest since December 2014 - the month after a decision by the Organization of the Petroleum Exporting Countries to stop cutting output to support prices.

Analysts at JBC Energy said the price reaction to the Iranian unrest was overdone, while Swiss bank Julius Baer (LSE: 0QO6.L - news) said prices projected "an overly rosy picture" that left the market at risk of profit-taking.

OPEC, supported by Russia and other non-members, began to reduce output a year ago to remove a glut built up in the previous two years. Compliance has been high, aided by involuntary declines in Venezuela, where the economy is collapsing, plus unrest in Nigeria and Libya.

Producers have decided to extend the supply pact until the end of 2018.

OPEC's cuts are helping reduce global inventories, even as production continues to rise in the United States, where OPEC efforts are spurring more output from shale. U.S. production rose to 9.78 million barrels in the last week.

Byron Wien of Blackstone (NYSE: BX - news) listed the prospect of U.S. crude topping $80 as one of 10 potential shockers for investors in 2018 in his annual list of surprises. (Addtional reporting by Henning Gloystein; Editing by David Gregorio, Mark Porter and David Goodman)