Key facts
- Goldman Sachs warns oil prices could reach $120 per barrel due to escalating shipping risks in the Middle East.
- Oil prices have rallied to their highest level since mid-July amid increased hostilities.
- The U.S. struck three Iranian oil tankers following Iranian attacks on U.S. warships.
- Iran has threatened more severe retaliation and plans to establish a new exclusion zone in the Persian Gulf.
- Goldman Sachs also sees potential upside in natural gas and refined product prices.
Goldman Sachs has issued a warning that oil prices could surge to as high as $120 per barrel if shipping disruptions in the Middle East intensify. The investment bank's co-head of global commodities research, Daan Struyven, cited the recent escalation of hostilities as a significant risk factor.
Oil prices have already seen a rally, reaching their highest level since mid-July and nearing the $100 per barrel mark. This surge follows a weekend of heightened tensions, including U.S. strikes on three Iranian oil tankers in response to ballistic missile attacks by the IRGC on two U.S. warships.
Following these events, Iranian officials have signaled a shift in their response strategy. Iranian parliament speaker Mohammad Bagher Qalibaf stated that the era of proportionate responses is over, warning that future retaliations will be "faster, heavier and more painful." Additionally, Iran indicated plans to announce a new "exclusion zone" in the Persian Gulf and Strait of Hormuz, with any vessels entering the area facing sanctions.
Early Monday trading saw Brent Crude trading above $97 per barrel and the U.S. benchmark, WTI Crude, above $92 a barrel. Struyven noted that while crude oil prices have meaningful upside potential, the supply shocks in the natural gas and refined product markets are even larger.