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.
“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 Monday 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.