Oil prices has been hovering near their lowest levels in seven months. Some analysts think the party may be over.

On Tuesday, West Texas Intermediate (CL=F) climbed above $73 per barrel while Brent (BZ=F) traded just above $77 per barrel. Prices "will rise back to $80 per barrel by the end of the year," wrote researchers at London-based Capital Economics.

Brent crude recently fell more than $5 per barrel in the span of a week — touching the lowest level since January amid a fall in global stock markets and ongoing concerns over a weaker Chinese economy. Fears of a US recession also weighed on prices.

But, Capital Economics added its unlikely the US is going into a recession as employment growth is still positive and oil demand has held up well.

“For now, our central case is that the US economy avoids a hard landing and that oil demand in the US and in China does not begin to fall sharply,” said the note to clients.

Escalated tensions in the Middle East is another reason why oil is poised to go higher given that Iran has indicated it will retaliate towards Israel for the assassination of a Hamas leader in Tehran.

Iran accounts for just over 3% of global crude production with close to 3 million barrels of crude output per day.

OPEC+ recently reiterated its plan to unwind some of its voluntary production cuts in October, but Saudi Arabia left the door open to pause or reverse output hikes, if the market won't support it. "Many [traders] believe a WTI price below $70 per barrel could induce further production cuts from OPEC. Crude prices are also flirting with an “oversold” condition with a corrective phase due. Dennis Kissler, senior vice president at BOK Financial said in a note on Tuesday.

Saudi Aramco's (2222.SR) CEO Amin Nasser said on Tuesday that the fundamentals don't support the current price move down in oil. "With regard to demand, we remain positive about the outlook for the global oil demand despite concerns about the economic downturn," said Nasser during the company's earnings call.

He also highlighted a replenishment of strategic crude oil inventories and current lower stockpile levels.

On Monday JPMorgan analysts reiterated their projection for Brent crude "close to $90 by September 2024," flagging the strength of global demand.

For 2025, the firm predicts prices will fall to $63 per barrel by September 2025 amid rising global supply.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.