Oxygen levels that are too high can cause blindness in preemies.
Also, it is not certain that it is the high oxygen in itself that causes the malformation of the blood vessels in the eye. It may actually be caused by a too sudden reduction of the oxygen partial pressure when the premature infant is removed from the oxygen enriched environment.
See this paper:
Retinopathy Of The Newborn Is Due To Hypoxia Not Oxygen Toxicity