Investment bank Goldman Sachs (NYSE"GS) forecasts that oil prices will reach $80 U.S. per barrel in the fourth quarter of this year, saying that the market has underestimated a rebound in demand coming out of the global pandemic.
Goldman Sachs sees oil at $80 U.S. a barrel even with a possible resumption of supply from Iran.
Even "aggressively assuming" a restart of Iranian exports in July, Brent crude oil prices would still reach the $80 U.S. mark by the fourth quarter, the bank said in a new report.
Oil prices fell last week after Iran's president, Hassan Rouhani, said that the United States was ready to lift sanctions on Tehran's oil, banking and shipping sectors.
Crude recouped some of those losses on Monday (May 24) as a potential snag emerged in reviving the 2015 Iran nuclear deal that could add more oil supply, with indirect talks between officials in Washington, D.C. and Tehran due to resume this week.
Goldman Sachs said a demand recovery in developed markets would offset a recent COVID-19 hit to consumption and likely slower recovery in South Asia and Latin America. Global demand could increase by 4.6 million barrels per day by the end of this year, with most of the gains likely in the next three months.
"Mobility is rapidly increasing in the U.S. and Europe, as vaccinations accelerate and lockdowns are lifted, with freight and industrial activity also surging," reads the Goldman Sachs report.
The investment bank also expects the Organization of the Petroleum Exporting Countries (OPEC), plus Russia, to offset any increase in Iran’s oil production by halting for two months an increase in their output in the second half of 2021.
