Goldman Sachs still expects crude oil to rise to $80 per barrel by the end of the year despite reports about progress on U.S.- Iranian talks about the lifting of sanctions.
According to a note released by the bank's analysts, the recovery in demand made possible by mass vaccinations will offset the effect of additional supply volumes from Iran, per a Reuters report.
"The case for higher oil prices therefore remains intact given the large vaccine-driven increase in demand in the face of inelastic supply," Goldman analysts said.
Last week, Iranian President Hassan Rouhani said that "the main agreement" on the lifting of the U.S. sanctions had been reached.
The U.S. and Iran have been holding indirect talks in Vienna since last month on possible ways for both countries to return to the deal. U.S. President Joe Biden has signaled a willingness to return to the nuclear deal, but only if Iran returns to full compliance in its nuclear activities.
Even before that, in April, Goldman analysts were talking about Brent crude hitting $80 per barrel later this year in what they said would be the biggest demand jump ever.
Higher demand for travel and acceleration of vaccinations in Europe are set to result in "the biggest jump in oil demand ever, a 5.2 million barrels per day (bpd) rise over the next six months," Reuters quoted Goldman Sachs as saying in a late April note to clients.
According to the investment bank, even the spike in new Covid-19 infections in parts of Asia and the continuing increase in new cases in India would not affect the immediate outlook for oil prices. Demand, the bank said, could rise by some 4.6 million by the end of the year.
"Mobility is rapidly increasing in the U.S. and Europe, as vaccinations accelerate and lockdowns are lifted, with freight and industrial activity also surging," the most recent note said.
By Charles Kennedy for Oilprice.com
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