May 9, 2018 / 2:05 PM / 8 months ago

Iran deal withdrawal, other global issues risk higher oil prices - Goldman Sachs

FILE PHOTO: A gas flare on an oil production platform in the Soroush oil fields is seen alongside an Iranian flag in the Persian Gulf, Iran, July 25, 2005. REUTERS/Raheb Homavandi/File Photo

(Reuters) - Oil prices are at risk for further gains due to the United States’ decision to withdraw from the 2015 Iran nuclear agreement, coupled with rising tensions in other oil-producing countries such as Saudi Arabia and Venezuela, Goldman Sachs said in a note Wednesday.

The investment bank’s current forecast is for Brent crude to hit $82.50 a barrel by the summer; it is currently trading around $77 a barrel. The harsher approach by the United States could result in an initial loss of about 500,000 barrels a day (bpd) in Iran’s output, which is currently 3.8 million bpd.

Such a loss would boost oil prices by about $6.20 per barrel, Goldman said. “Such elevated oil geopolitical risks exacerbate the upside risks to Brent forecasts and reinforce our view that oil price volatility will continue to increase,” they wrote.

Reporting by David Gaffen; editing by Jonathan Oatis

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