A worker on a an oil drill near New Town, North Dakota. Daniel Acker | Bloomberg | Getty Images

The International Energy Agency (IEA) is concerned about a dramatic upswing in energy prices, according to its latest monthly report, with oil, gas and coal prices currently trading at multi-year highs. "Our position is that expensive energy is back … And it poses a threat to economic growth," the Paris-based organization said Friday. Oil prices have surged more than 25 percent this year, prompting some investors to speculate about the possibility of a return to triple-digits before year-end. Meanwhile, President Donald Trump has repeatedly blamed OPEC for rising gasoline costs, as prices continue to head in the wrong direction for American consumers with midterms just around the corner. As a result of soaring energy prices, the IEA downwardly revised its demand outlook over the next two years. The group now expects demand growth to slow by 110,000 barrels per day to 1.3 million barrels per day (mb/d) in 2018 and 1.4 mb/d in 2019. International benchmark Brent crude traded at around $81.29 Friday morning, up around 1.2 percent, while U.S. West Texas Intermediate (WTI) stood at $71.73, slightly over 1 percent higher.

'New twin peaks' for demand and supply

On Tuesday, the International Monetary Fund (IMF) cut its global economic forecasts for 2018 and 2019 by 0.2 percentage points to 3.7 percent. The Washington D.C.-based institute also raised concerns that demand for oil may slump over the coming months. In addition to the IEA and the IMF, OPEC also cut its forecast of oil demand growth on Thursday. The Middle-East dominated cartel joined a chorus of organizations citing headwinds facing the broader economy next year, highlighting the potential fallout from a U.S.-Sino trade war as well as volatile emerging markets. The closely-watched IEA report comes less than four weeks before the U.S is set to impose targeted crude sanctions against Iran, with Brent prices now established above $80 a barrel.

"It is an extraordinary achievement for the global oil industry to meet the needs of a 100 million barrels per day market, but today … We have reached new twin peaks for demand and supply by straining parts of the system to the limit," the IEA said Friday. The group warned recent production increases had come at the expense of spare capacity, which has already been stretched to just 2 percent of global demand — with "further reductions" to come. "This strain could be with us for some time and it will likely be accompanied by higher prices, however much we regret them and their potential negative impact on the global economy," the IEA said.

Iran sanctions