Goldman Sachs said it expects oil prices to climb to $80 per barrel in the fourth quarter of this year, arguing that the market has underestimated a rebound in demand even with a possible resumption in Iranian supply, Report informs referring to Reuters.
"The case for higher oil prices therefore remains intact given the large vaccine-driven increase in demand in the face of inelastic supply," the bank said in a note dated Sunday.
Even "aggressively assuming" a restart of Iranian exports in July, Brent prices would still reach the $80 mark by the fourth quarter, it said.
Oil prices fell last week after Iran's president, Hassan Rouhani, said the United States was ready to lift sanctions on Tehran's oil, banking and shipping sectors.
Crude recouped some of those losses on May 24 as a potential snag emerged in reviving the 2015 Iran nuclear deal that could add more oil supply, with indirect talks between Washington and Tehran due to resume this week.
Goldman Sachs said a demand recovery in developed markets would offset a recent coronavirus-led hit to consumption and likely slower recovery in South Asia and Latin America.
Global demand could increase by 4.6 million barrels per day through year-end, with most of the gains likely in the next 3 months, it said.
"Mobility is rapidly increasing in the US and Europe, as vaccinations accelerate and lockdowns are lifted, with freight and industrial activity also surging," the note said.
The bank also expects the Organization of the Oil Producing Countries (OPEC) and allies including Russia, a grouping known as OPEC+, to offset any ramp-up in Iran production by halting for two months an increase in its output in the second half of 2021.
This would help offset the perceived bearish impact in the physical market of the release of Iranian floating storage, it said.
The price of July futures for Brent on the London ICE Futures exchange by 15:16 (GMT+4) is $67.59 per barrel, which is $1.15 (1.73 percent) higher than the price at the close of the previous session.
The price of July futures for WTI crude oil on the New York Mercantile Exchange (NYMEX) by this time is $64.68 per barrel, which is $1.1 (1.73 percent) higher than the final value of the previous session.