While the market is anticipating the Islamic Republic’s supply will pick up again by late summer, the demand recovery will be strong enough to absorb it, Goldman Sachs Group Inc. said. The bank expects Brent futures to hit $80 a barrel in the next few months. “Seasonally we’re coming into a strong demand period, overwhelming concerns on supply,” said Peter McNally, global head for industrials, materials and energy at Third Bridge. With the U.S. continuing to reopen, air travel picking up and Europe lifting pandemic-driven lock downs, “it’s more than likely those barrels can get absorbed.”

Talks between Iran and world powers will continue in Vienna this week to resolve outstanding issues. As part of that process, Iran extended a United Nations nuclear inspections agreement, buying diplomats time to revive the landmark deal that would usher in an official return of the Persian Gulf nation to world oil markets. “Statements over the weekend in the time between the expiration of the old monitoring agreement and the signing of the new deal made it clear that the sense of optimism (over a deal) that was pressuring prices last week was probably overdone,” Bob Yawger, head of the futures division at Mizuho Securities, said in a note. “There is still a lot of work that needs to be done before a final agreement is finished.”

Global benchmark crude has been largely stuck between $60 and $70 a barrel since March, with concern about returning output and Covid-19 flare-ups counterbalanced by the demand recovery underway in some key markets. Virus cases in the U.S. were below 30,000 every day last week for the first time since June, and drivers are taking to the road again in parts of Europe, helping boost demand in the region.

The discount for U.S. benchmark crude futures against Brent shrank on Monday to its narrowest since the end of November on a settlement basis. The smaller that discount becomes, the less attractive U.S. crude exports are to foreign buyers.