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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Goldman Bullish On Oil As It Eyes Major Relief Package

Goldman Sachs

Oil prices will be supported this year by the upcoming massive economic stimulus package in the United States and the low probability of much Iranian oil returning to the global market, according to Goldman Sachs.

The $1.9-trillion COVID relief package proposed by President Joe Biden is set to stimulate the American economy, leading to a rise in U.S. oil demand by around 200,000 barrels per day (bpd) over 2021 and 2022, Reuters quoted a note from the investment bank as saying.  

Goldman Sachs has been bullish on oil since the end of last year, seeing Brent Crude averaging $65 in 2021.

Apart from a stronger economy in the United States this year, the bank expects that the issue with the Iranian nuclear deal will not be resolved soon.

The Trump Administration imposed sanctions on Iran’s oil exports in 2018, looking to cut off the oil sales of the Iranian regime, after the United States withdrew from the so-called Iranian nuclear deal.

President Biden, however, has pledged to offer Tehran a path back to diplomacy and a return to the nuclear deal. That is, if Iran returns to full compliance with that agreement, hammered out while Biden was President Obama’s vice president.

President Biden’s initial talks with foreign counterparts and allies will include Iran and the current U.S. sanctions, White House Press Secretary Jen Psaki has said. This signals that the lifting of sanctions on Iran is not an immediate priority for the U.S. Administration.

“Delays in a full return of Iran production would reinforce our bullish oil outlook since we already forecast a tight 2022 crude market with low OPEC spare capacity,” Goldman Sachs analysts said in the note.

The U.S. Administration’s moratorium on all oil and gas leasing in the Arctic National Wildlife Refuge in Alaska, the revocation of the Presidential permit for the Keystone XL pipeline, and the temporary ban on issuance of drilling permits on federal land and waters do not, on their own, mean that the oil market will tighten faster in 2021-2022 than previously expected, according to Goldman.

By Tsvetana Paraskova for Oilprice.com


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  • Mamdouh Salameh on January 22 2021 said:
    What will be underpinning crude oil prices in 2021 is fast improving fundamentals, an accelerating depletion of global oil inventories projected to hit an estimated 100 million barrels in the first quarter of 2021 and also an accelerating global rollout of vaccines with prospects of an earlier return of the global economy to full economic activities.

    And while a $1.9-trillion COVID relief package proposed by President Joe Biden to stimulate the US economy will be bullish for oil prices, an increase of around 200,000 barrels a day (b/d) in US oil demand in 2021, a moratorium on all oil and gas leasing in the Arctic National Wildlife Refuge in Alaska and a revocation of the Presidential permit for the Keystone XL pipeline will hardly register on the oil prices radar.

    Furthermore, neither a lifting of sanctions nor an easing of them can be expected in the near future. Iran has made it clear from the start that that it will neither agree to any limits on its nuclear and ballistic missile development programmes nor will it negotiate with President Biden without a lifting of US sanctions first or at least a significant easing of the sanctions. This is something President-elect Biden will find difficult to accept and therein lies the rub.

    Based on the above, the Brent Crude oil price could be expected to hit $60 a barrel in the first quarter of 2021 rising further to $70-$80 in the third quarter and averaging $60-$65 in 2021. Moreover, global oil demand could be expected to return to pre-crisis levels of 101 million barrels a day (mbd) by mid-2021.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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