Goldman Sachs predicts oil could hit $120 as shipping risks in the Middle East rise

Goldman Sachs said the risk of broader shipping disruptions in the Middle East could lift oil prices to as much as $120 a barrel. The firm’s co-head of global commodities research, Daan Struyven, told Bloomberg TV that recent events suggest a heightened chance of shipping interruptions.

Brent crude rose above $97 a barrel and U.S. West Texas Intermediate traded over $92 a barrel in early Asian trading, reaching levels not seen since mid-July. The price gains followed U.S. strikes on three Iranian oil tankers after Iran’s Revolutionary Guard Corps fired ballistic missiles at two U.S. warships.

Iranian officials warned of a new “exclusion zone” extending from the U.S. naval blockade toward the Strait of Hormuz and into the Persian Gulf, stating that any vessel identified in the area would be placed on a sanctions list.

"Events over the last few days do suggest that the risk of shipping disruptions broadening and intensifying is an important one," Struyven said.

Goldman Sachs expects further upside for crude prices and advises investors to also consider rising natural-gas and refined-product prices, noting that supply shocks appear larger in those markets than in crude.

The outlook comes as regional tensions continue to affect global energy markets.