Mubasher: Goldman Sachs lifted its projection for oil prices this year, with market supply being tightened by the “shock and awe” implementation of output curbs and US sanctions, Reuters reported.

Brent futures are now set to average $66 per barrel (pb) this year, compared with an earlier forecast of $62.50 pb, the US bank said in a note, cited by the news agency.

As for Nymex crude, the US benchmark would record an average of $59.50, up from the last estimate of $55.50 pb.

For the second quarter, Brent is expected to average $75.50 pb, versus an earlier projected average of $65 pb, Goldman said, maintaining the contract’s price forecast at $60 pb for the next year.

World oil market would remain in a deficit of 500,000 barrels per day (bpd) in the second quarter, the investment bank said.

It is worth noting that crude prices hit their highest levels in five months earlier on Tuesday, with Brent reaching $71.34 pb, while Nymex touched $64.77 pb.

Oil market supply tightened this year as a result of the reinstatement of US sanctions against major exporters Iran and Venezuela, as well as the output cuts led by the Organization of the Petroleum Exporting Countries (OPEC) agreed late last year.

The global benchmark’s forward curve is set to shift more to backwardation, Goldman predicted.

This means that contracts for future delivery are cheaper than spot deliveries, an indicator of tighter market supply, according to Reuters.

“While the macro risk-on environment and the threat of disruptions may drive spot prices even higher, we still expect that prices will decline gradually from this summer as shale and OPEC production increases,” Goldman noted.

How OPEC would end its current supply curbs remained a major driver for oil prices in the months and years ahead, it added.

By 8:52 am GMT, Brent crude futures edged up 0.14% to $71.20 pb, while US Nymex futures rose 0.31% to $64.60 pb.