Goldman Sachs, though, said even with a slowdown in demand and soaring USA output, global oil markets would remain tight. The International Energy Agency on Wednesday warned that demand could be sapped by higher-than-expected prices.
The International Energy Agency (IEA) has cautioned that huge consumption decline may trail the surges in oil prices as the commodity advances to $80 a barrel in London for the first time since 2014.
Crude oil prices are now slightly higher - both Brent and WTI are up today.
The world is now watching the growing tensions in the Middle East, and oil market analysts are guesstimating just how much Iranian oil supply the renewed USA sanctions could stifle.
Markets are set to tighten further as output sinks in Venezuela and the U.S. re-imposes sanctions on Iran.
Ample supplies in the market and potential production increases by U.S. and European oil giants helped ease recent price hikes.
Oil's advance to $80 brings it to the level that OPEC's biggest member, Saudi Arabia, is reportedly seeking to cover the cost of weighty domestic spending commitments. Reuters is reporting that USA crude arriving in Asia hit an all-time high of close to 25 million barrels in May with cargoes discharging in China, South Korea, Singapore, India and Malaysia, according to trade flows data on Eikon. According to Goldman, global oil demand growth in the first quarter of 2018 is likely to have seen the strongest yearly growth since the fourth quarter of 2010.
Oil prices fell on Wednesday, weighed down by ample supplies despite ongoing output cuts by producer cartel OPEC and looming USA sanctions against major crude exporter Iran.
In Venezuela, meanwhile, the IEA noted that "the pace of decline of oil production is accelerating and by the end of this year output could have fallen by several hundred thousand barrels a day".
Brent crude futures were at $78.23 per barrel at 0445 GMT, down 20 cents, or 0.3 percent, from their last close.
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US crude dropped 6 cents to $70.90 a barrel, while Brent fell 22 cents to $78.01.
Mihir Kapadia, CEO and founder of Sun Global Investments, agrees that geopolitical tensions are driving energy prices higher, with unrest is building in Venezuela ahead of this weekend's presidential elections. "Even if shale producers wanted to increase output further, they can't because of constraints in the Permian", said the investor.
Saudi Arabia has acknowledged the need to work with producers and consumers to mitigate possible supply shortfalls, which could be offset by higher expected growth in U.S. oil output of 120,000 bpd this year.
The direction of oil prices is highly dependent on OPEC's decision at its meeting next month and its actions the rest of the year.
Going forward, however, Iran's oil exports are expected to fall.