Rule out and reason: First kill the wrong options. Lithium undergoes no hepatic metabolism, so thiazide cannot inhibit its metabolism, option B falls. Thiazide is not simply an additive mood agent, so option C is meaningless. That makes All of the above wrong too.
Now the real mechanism: lithium mimics sodium in the nephron. Thiazides block distal sodium reabsorption, causing natriuresis and mild volume depletion. The proximal tubule reacts by avidly reabsorbing sodium, and lithium rides along the same path, so its reabsorption climbs and plasma lithium rises into the toxic range, producing coarse tremor and other toxicity.
So option A, increased tubular reabsorption of lithium, is correct.
Pearl: any sodium-depleting state (thiazide, low-salt diet, dehydration) raises lithium; manage by lowering the lithium dose and checking levels.
Ref: K. D. Tripathi, 7th Edition, lithium.