It began when oil prices hit $70 a barrel between Christmas and the New Year and some experts predicted that higher petrol and diesel costs would be a worrying feature of 2018. The Royal Automobile Club in Britain warned that "the good times of lower cost fuel appear to be over", as oil hit a high of almost $70 a barrel.
However, Brian Donaldson of Maxol, Ireland's biggest indpendent oil company, predicts that oil will fall back to nearer $60 a barrell this year and prices at the pumps will not move significantly from where they were last year (€1.39 a litre for petrol and €1.28 a litre for diesel, on average).
Brian Donaldson predicts fuel prices will fall back to last year's levels.
"The reality is that when prices go too high then demand falls. We have already seen a fall away from that peak price last week and, barring something major and unforeseen, we won't be seeing any upward spiral", he told RTE Motors.
He says American oil production from shale drilling is increasing output and observes reports that Saudi Arabia has pushed up production in the Middle East and also that unrest in Iran has not yet affected production or distribution.
"We are also being helped by the strength of the Euro against the US dollar, which is now at 1.20, and oil is priced in US dollars", he adds. He said he expected a fall back to between a price per barrel of nearer to $60 over the coming year.
Reuters reports that oil prices fell last Friday, dropping from highs last seen in 2015, as soaring U.S. production undermined a 10 percent rally from December lows that were driven by tightening supply and political tensions in OPEC member Iran.
U.S. West Texas Intermediate crude futures were at $61.40 a barrel by 1140 GMT. That was 61 cents, or 1 percent, below their last close. WTI hit $62.21 the previous day, which was its strongest since May, 2015.
Traders said political tensions in Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), had pushed prices higher.
"The protests in Iran add more fuel to the already bullish oil market mood," said Norbert Ruecker, head of commodity research at Swiss bank Julius Baer.
Oil prices have received general support from production cuts led by OPEC and Russia, which started in January last year and are set to last through 2018, as well as from strong economic growth and financial markets.
That has helped to tighten markets. U.S. commercial crude inventories C-STK-T-EIA fell by 7.4 million barrels in the week to Dec. 29, to 424.46 million barrels, according to data from the Energy Information Administration (EIA).
That is down 20 percent from peaks last March and close to the five-year average of 420 million barrels.
Yet given Iran’s oil production has not been affected by the unrest and that U.S. output C-OUT-T-EIA is soon likely to break through 10 million barrels per day (bpd), a level so far reached only by Saudi Arabia and Russia, doubts are emerging whether the bull run can last.
Bank Jefferies said the oil price "upside from here is not obvious to us" but added that it expects the oil market to remain undersupplied through 2018.
Julius Baer’s Ruecker said that crude prices above $60 project an "overly rosy picture".
"Oil production disruptions (in Iran) remain a very distant threat ... disruptions in the North Sea have been removed ... (and) U.S. oil production surpassed the 2015 highs in October and is set to climb to historic highs this year," he said.
Lukman Otunuga, analyst at futures brokerage FXTM, struck a similarly cautious tone, saying: "While the current momentum suggests that further upside is on the cards, it must be kept in mind that U.S. shale remains a threat to higher oil prices."