Goldman Sachs says oil prices are going to spike

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"With prices moving close to $US80 a barrel and with a great opportunity presented to Saudi Arabia and Russian Federation to regain market share without crashing the oil price, we think there is a good chance the current OPEC+ deal will end by the end of 2018, if not before".

What the new sanctions will be is not yet known, but previous sanctions on the Middle Eastern country saw a major drop off in oil exports that other OPEC members were only too happy to lap up. That would hurt not just Iran's economy but also the dollar's liquidity, as the global oil trade undergirds the greenback, said Edward Al Hussainy, senior analyst, global rates and currency at Columbia Threadneedle in Minneapolis.

Prices in 2014 reached as high as $144 per barrel before dropping to $57 a barrel, which contributed to the low prices at the bowsers later in the year.

The surge in oil prices comes at a time of tight supply amid record Asian demand and voluntary output restraint by the Organization of the Petroleum Exporting Countries and non-OPEC producers including Russian Federation.

OPEC meets next in June, where it is widely expected to continue with the supply cuts until the end of 2018. The five-year supply average is 420 million barrels. Other analysts think that the reduction of Iranian exports could be closer to 1 million bpd. The extra demand is helping to wipe out an oil glut that has plagued markets.

Inventories at Cushing, Oklahoma, the delivery point for US crude futures, fell about 410,000 barrels between May 8 and May 11, said traders, citing data from market intelligence firm Genscape.

The Organization of the Petroleum Exporting Countries is in the midst of an oil supply-cutting deal with non-OPEC producers such as Russian Federation that has helped erase a global glut and boosted oil prices above $75, the highest since 2014.

Side by side, the USA government also reimposed sanctions on the country.

Two days after Donald J. Trump chose to withdraw from the Iran nuclear agreement, Zanganeh said the US president is engaging in "shenanigans" in the oil market - and that he's cut a deal with some members of the Organization of Petroleum Exporting Countries to keep production down and prices high. Saudi Arabia said last week it was ready to offset any shortage but would not act alone.

"It's the same witches brew of bullish stuff: Iran, Venezuela, the lack of alacrity by Saudi Arabia to bring more oil onto the market", said John Kilduff, partner at Again Capital in NY.