Goldman Sachs said Tuesday that while clashes in the Kurdistan region of Iraq posed a risk to oil output, intensifying geopolitical tensions between the U.S. and Iran remained a more formidable and longer-term threat to global oil supply.
After several weeks of fairly flat trade, a risk premium has returned to oil markets and boosted global prices. On Monday, Iraqi forces moved into the oil-rich province of Kirkuk — threatening oil supplies — while political tensions between the U.S. and Iran continued to reverberate.
"In the case of Iran, there are likely no immediate impacts on oil flows and there remains high uncertainty on potential reintroduction of U.S. secondary sanctions. If they are, we expect that several hundred thousand barrels of Iranian exports would be immediately at risk," analysts at Goldman Sachs said in a research note published Tuesday.
Instead, he asked lawmakers to toughen the agreement, negotiated between Iran and six world powers, by amending a U.S. law. At the same time, the U.S. administration will try to convince European leaders to impose new sanctions on Tehran and return to the negotiating table.
In the absence of support from other countries, Goldman suggested it is unlikely production would fall by 1 million barrels per day to the levels before Western sanctions were imposed on Tehran.