Vaccinations and Iran delays to see Brent hit $80/b this summer: Goldman

London, (Quantum Commodity Intelligence) – Global oil demand growth will accelerate at breakneck pace over the next few months, rising from 96.5 million bpd in May to 99 million bpd in August, according to a note sent to clients by US bank Goldman Sachs.

Brent will hit $80/b in the summer rather than the fourth quarter amid widening backwardation in the forward curve. 

Jet demand, the laggard of the oil complex, will surprise to the upside amid the roll out of vaccinations globally.

Despite its large pool of spare capacity, the OPEC+ group will fall behind the rebound in demand, and recent headlines suggest the easing of Iranian sanctions wont happen until September and October. 

The surge in demand will be filled by refiners, pushing up crude prices in the scramble to buy barrels.

Goldman expects there will be a "faster rebalancing of the crude relative to petroleum product markets", and recommends bullish Brent flat price and timespread bets, while shorting Brent puts versus long third quarter Low Sulfur Gasoil futures in Europe.  

Rising car travel in the US and Europe drove global oil demand growth up 1.5 million bpd in May from April, and the pace will continue if not accelerate as jet demand recovers globally and the Middle East turns on the air conditioners over the summer. 

The lack of response by US shale producers will cause a net drop in crude exports from the US this year that will outweigh cuts made by Saudi Arabia earlier this year, the bank said.

With the spread between US oil (WTI) and international benchmarks (Brent) narrowing, the bank said "North America (had taken) the mantle from Chinese demand or OPEC cuts and disruptions in tightening the global oil market."

The report comes on the same day that the IEA released its June monthly report with its first forecast for 2022.

The oil watchdog of the OECD said that oil demand would exceed 100 million bpd by the end of 2022 and urged OPEC+ to "open the taps".

With talks on Iran stalling, oil analysts are increasingly becoming bullish.