Analysis by Matt Egan, CNN Business

(CNN) -- Washington's crackdown on Iran is just the latest global flashpoint rippling through increasingly tight oil markets.

Even oil bulls on Wall Street were surprised when President Donald Trump vowed this week to wipe out Iran's oil exports.

The deepening Iran sanctions, on top of separate penalties on crisis-stricken Venezuela and violence in Libya, are causing concern about once-plentiful oil supplies.

"All of these geopolitical stories could present a cruel summer scenario for President Trump as he seeks to keep oil prices in check," Helima Croft, global head of commodity strategy at RBC Capital Markets, wrote to clients this week.

Trump's Iran decision represents "the ultimate high wire act for oil prices," Croft warned.

Energy markets wasted little time responding. US oil prices climbed above $66 a barrel for the first time since last fall. Brent crude, the global benchmark, is now above $74 a barrel. Both have rebounded dramatically from last year's bear markets.

Gasoline prices continue to creep higher as well. The national average is now $2.86 a gallon, up from $2.63 a month ago, according to AAA.

'Extremely hard line'

Investors, aware of Trump's desire to prevent gasoline prices from hurting the economy, were caught off guard by the Iran move.

"The timing of this halt is much more sudden than we and consensus had expected," Goldman Sachs strategists led by Damien Courvalin wrote to clients.

Rather than give India, China and other buyers of Iran's oil time to find alternatives, the Trump administration announced that sanctions waivers would go away by May 2.

"This news is an extremely hard line from the US," analysts at consulting firm Facts Global Energy wrote in a report.

Within weeks, between 1.1 million and 1.3 million barrels of daily Iranian exports will be taken off the market, FGE estimates.

What will China do?

The ultimate impact of the Iran crackdown will be determined by how other countries respond.

China and Turkey, two of Iran's biggest buyers, have already suggested they won't abide by the US sanctions.

"Iran is not going to roll over and accept this," FGE analysts wrote. The firm suggested that Iran will smuggle out 200,000 to 300,000 barrels of rebranded oil per day through Iraq, Pakistan and perhaps Turkey.

And China could use the Iran issue as a bargaining chip in ongoing trade negotiations with Washington, which is seeking to starve the regime in Tehran of its No. 1 source of cash.

Still, foreign companies don't want to run afoul of US sanctions. Doing so could block their access to the financial markets.

"Foreign refineries with significant exposure to US capital markets will be very quick to cut all ties with Iran," RBC's Croft predicted.

Venezuela, Libya in crisis

Beyond Iran, the oil markets have been rattled by recent developments in other nations in OPEC, the oil cartel led by Saudi Arabia.

The political and humanitarian crisis in Venezuela, marked by mass blackouts and shortages of food and medicine, has driven the nation's oil production lower. That trend was amplified by US sanctions on PDVSA, Venezuela's state-owned oil company. Venezuelan oil exports to the United States have vanished.

Libya's oil output had been on the rebound from the 2011 civil war. That recovery is now being threatened by an outbreak of violence there.

Oil analysts are divided over how high oil crude prices will go.

Goldman Sachs, for instance, believes the tightening of the Iran sanctions will only have a "limited price impact." The investment bank is even still predicting that oil prices will decline later this year.

One reason? The American shale boom.

Higher prices will encourage US frackers to ramp up production. A $5 increase in US oil prices would translate to 300,000 barrels per day of additional US output in 2020, according to Goldman Sachs.

Soaring US oil production could be further aided by the construction of new pipelines in the Permian Basin in West Texas.

Saudis: No need to do anything yet

The other elephant in the room is Saudi Arabia. The kingdom has indicated it's willing to boost output — if necessary.

"We will not leave our customers scrambling not finding the oil they need," Khalid Al-Falih, the Saudi energy minister, said on Wednesday from a conference in Riyadh.

However, Al-Falih also noted that oil inventories are continuing to rise despite the Venezuela and Iran sanctions.

"I don't see the need to do anything immediately," he said.

Saudi Arabia and the United Arab Emirates have enough additional supply on tap to make up the hole left by Iran, according to analysts at JBC Energy.

But Saudi Arabia has been cutting, not growing, production. The kingdom took the brunt of sharp output cuts that OPEC and its allies agreed to late last year.

OPEC could act, eventually

FGE estimated that collectively OPEC and its allies need to raise output by 1.2 million to 1.4 million barrels in the third quarter to prevent "heavy" declines in global inventories.

OPEC and its allies meet in June in Vienna to decide next steps.

Saudi Arabia is currently producing 9.9 million barrels of oil per day, which is below its own target. FGE estimates it will bring its output up by 400,000 barrels to meet that target.

But the Saudis are snake-bitten. The kingdom ramped up production to record highs a year ago — only to be surprised when Trump granted Iran sanctions waivers. That left oil markets deeply oversupplied. Prices crashed.

Croft predicted the Saudis will "exercise more caution this time around" by only gradually adding barrels to the market.

Modestly higher prices would help the kingdom meet its vast budget needs. Saudi Arabia has a fiscal breakeven of $88 a barrel, RBC said.

"There remains a fairly wide gap between Washington and Riyadh's price targets," Croft wrote.