$70 oil: Get used to it

With little spare capacity and strong demand from the U.S. and China, markets are more vulnerable than ever before.

NEW YORK (CNNMoney.com) — Oil prices may fall if progress is made in talks with Iran over its nuclear program, but things like surging auto sales in China and record gasoline demand in the United States mean that oil prices near record highs are probably here to stay.

Oil hit a fresh trading high of $75.78 Friday, pushed up by strong U.S. demand over the holiday weekend and ongoing tensions with Iran.

Prices could fall later this week as talks, which many expect to be constructive, continue with Iran over it’s disputed nuclear program. But few think they’ll fall too far.

“If there’s a breakthrough, we could head back to around $70,” said Nauman Barakat, an energy trader at the investment bank Macquarie. “But fundamentally, it’s difficult to make a bearish case.”

CNN/Money