Goldman Calls for $80 Oil, Despite Progressing Iran Deal

After trending lower last week, fuel prices are on the rise again this morning, buoyed by threats to the US-Iran nuclear deal. The UN’s nuclear watchdog, the International Atomic Energy Agency (IAEA), narrowly reached an agreement with Iran to extend its three-month monitoring agreement for another month. The deal is not directly related to US-Iran negotiations, but it does show that Iran is willing to come to an agreement. Over the weekend, Iran declared the deal had ended, but an agreement emerged Monday morning.

Even if this agreement paves the way for US-Iran negotiators to reach a deal, it may not suppress prices for long. Goldman Sachs analysts noted that even with Iranian supply hitting the market, oil prices are still likely to climb to $80/bbl by the end of the year. Their report projects that OPEC will offset any increased Iranian production, providing room for oil prices to move higher throughout the year. Rapidly expanding fuel demand from developed countries will outweigh climbing COVID cases in India, resulting in a strong recovery.

In pipeline news, a US federal court ruled that the Dakota Access Pipeline, which transports 570 kbpd of crude oil from the Bakken crude basin down to Illinois refineries, can remain online while an environmental assessment is done. The Standing Rock Sioux tribe sued the pipeline’s operator, claiming the pipeline violated their tribe’s sovereignty and presented an “unacceptable risk” to the environment and drinking water. The court ruled that continued operations could not be proven to cause irreversible harm, so the pipeline can remain online until the environmental report is completed by the US Army Corp of Engineers in 2022. The ruling is good news for the oil companies reliant on the pipeline, ensuring cheap Bakken fuel continues flowing to Midwest consumers.