US stimulus, continued Iran sanctions supportive for oil prices - Goldman
US President Joe Biden's proposed $1.9 trillion stimulus package aims to jump-start the economy and accelerate vaccines distribution to control Covid-19, which has hammered global oil demand
The new US administration's plans for large fiscal spending and little urgency to lift sanctions on Iran are constructive for oil and gas prices, Goldman Sachs said on Thursday.
"On our estimates, a $2 trillion stimulus over 2021-22 would... boost US demand by about 200,000 barrels per day," the bank said in a note.
US President Joe Biden's proposed $1.9 trillion stimulus package aims to jump-start the economy and accelerate vaccines distribution to control Covid-19, which has hammered global oil demand.
Oil prices fell on Friday on worries that new pandemic restrictions in China will curb fuel demand in the world's biggest oil importer.
The bank also said that since the Biden administration is looking to strengthen and lengthen nuclear constraints on Iran, the country's oil exports would remain moderate this year and at 0.5 million barrels per day in the second half of 2021.
The Iran issue will be part of President Biden's early talks with foreign counterparts and allies, White House Press Secretary Jen Psaki said.
"Delays in a full return of Iran production would reinforce our bullish oil outlook since we already forecast a tight 2022 crude market with low OPEC spare capacity," Goldman said.
Biden also temporarily suspended oil and gas leasing and permitting on federal lands, canceled a permit for the Keystone XL oil pipeline from Canada, and halted oil leases in the Arctic National Wildlife Refuge in Alaska.
"On their own, these actions do not point to a faster tightening of the oil market in 2021-22," Goldman said, adding the ban still leaves a window of up to two years to drill from elevated outstanding permits.
