Goldman Sachs expects that the US decision to end exemptions from sanctions on Iranian oil imports will have a limited impact on prices, although the timing of the moratorium has come as a surprise.
"While we acknowledge the risk of price rises in the near term, we confirm our basic expectations for the price range of Brent between $ 70 and $ 75 a barrel for the second quarter of 2019," he wrote in a note on Monday.
Washington demanded on Friday that Iranian oil buyers stop their imports by May 1 or face sanctions in a bid to dry up Tehran's oil revenues. Crude prices rose to a six-month high on fears of a potential supply crisis.
The bank is still expecting prices to fall in 2020 as market supplies improve and fog over whether the Organization of the Petroleum Exporting Countries (OPEC) and other producers will continue to abide by a curbing production agreement to support prices after June.
The US investment bank expects Iranian production to shrink by 900,000 barrels per day (bpd) compared to a surplus of two million bpd, which is expected to increase further later this year.
He added that the US announcement will support the prices of Dubai crude and crude to measure the Middle East compared to Brent prices, given the difference in quality between the lost Iranian quantities and lighter materials to be compensated by Saudi Arabia and the UAE.