Helima Croft, the head of global commodities strategy at RBC, said it is "realistic" to start thinking about Brent nearing the $80 a barrel mark. "To move beyond that we'd have to see Venezuela really drop fast. Iran would have real problems, and Yemen would have to visibly look a lot worse," she said.
This is the first significant political premium to show up in crude prices since OPEC and Russia joined forces in late 2016 to steady a market faced with a serious global glut.
As oil prices were in free fall then, Saudi Arabia and Russia led other oil-producing nations to agree to curb production by 1.8 million barrels a day. At the time, oil supplies for OECD nations had surged to near 400 million barrels above their five-year average, and were still running at about 300 million barrels above the average at the end of 2016.
The Organization of the Petroleum Exporting Countries reported this week that those stocks have fallen to just 43 million barrels above the five-year average, and that average is a line where oil producers would see the market as more balanced.
Until now, "geopolitics didn't matter because we were swimming in oil," said Croft.
In its monthly oil market report, OPEC said Thursday that the cartel's total crude output declined by 201,000 barrels a day in March, to average just below 31.96 million barrels a day. The decline was mainly from lower output from Angola, Venezuela, Algeria and Saudi Arabia.
Croft said there's a strong case to be made for both bulls and bears currently, depending on Middle East tensions and the outcome of trade conflict between the U.S. and China. "Which war is going to win out? The Middle East war or the trade war? If the trade war comes back and dominates the headlines, you could have a broad-based macro sell-off that takes oil down with it."
The other unknown is the U.S. shale production, which has increased as OPEC production decreased. OPEC also said Thursday that the world's total oil supply rose by 180,000 barrels a day last month, mainly because of non-OPEC producers such as the U.S., Norway and the U.K.
"Shale is the reason we're not trading over $100 a barrel, way more than $100 a barrel," said Francisco Blanch, global head of commodities and derivatives at Bank of America Merrill Lynch. Production from shale "has been the incremental barrel for years. Not for the last year or two but for seven years."
Analysts are watching for any changes to come with Bolton as national security advisor and a new secretary of State, Mike Pompeo, who is awaiting Senate confirmation.
"I think the escalation of tensions with Russia is a major factor that could impact oil prices," said Blanch. He pointed to the steep drop in aluminum prices this past week, since the U.S. sanctioned Russian oligarchs and companies for meddling in the election.
Saudi Arabia and Russia are expected to try to extend their production arrangement after it expires in December. The agreement will be reviewed when OPEC meets in June. Saudi Arabia Energy Minister Khalid Al-Falih recently told CNBC that it's important to keep the agreement going.
"We will review in June what are the specific targets for a balanced market," said al-Falih, during a visit to the U.S. last month. He said even if the market is balanced, the producers may not want to "lift our hands from the steering wheel and leave the market without stewardship" because it could quickly become out of balance.
"The bottom line is they're committed to holding back supply from the market, which combined with the continued decline of PDVSA in Venezuela is going to make for higher oil prices," said Kilduff.