Goldman Sachs says oil prices could rise to $120 a barrel if attacks on Middle East shipping keep escalating. The warning follows a weekend U.S. strike on three Iranian oil tankers and an Iranian threat to declare a new exclusion zone near the Strait of Hormuz.
Goldman Sachs warns that crude oil could climb as high as $120 per barrel if shipping disruptions in the Middle East broaden, Daan Struyven, co-head of global commodities research at the bank, told Bloomberg TV that the risk of these disruptions intensifying is an important one. His comments came after prices jumped early Monday in Asian trading to their highest level since mid-July.
Oil has rallied in recent days amid a re-escalation of hostilities, nearing the $100-per-barrel threshold. The move follows a weekend in which the U.S. struck three Iranian oil tankers in response to the IRGC targeting two U.S. warships with ballistic missiles. Early Monday, Brent Crude traded above $97 a barrel, while WTI Crude traded above $92 a barrel.
Following the strikes, Iranian parliament speaker Mohammad Bagher Qalibaf said the era of "proportionate responses" is over and warned that future Iranian retaliation will be faster, heavier and more painful. Iran also said it would announce a new exclusion zone in the coming days, running from the line of the U.S. naval blockade toward the Strait of Hormuz and into the Persian Gulf.
Mohsen Rezaei, the new head of Iran's Supreme National Security Council, said any ship entering the zone with the intention of passing through the Strait of Hormuz would be placed on Iran's sanctions list once identified.
Goldman sees meaningful upside to crude prices, but Struyven told Bloomberg that investors should instead bet on rising natural gas and refined product prices. In gas and fuels, according to Struyven: "the supply shocks are bigger than in the crude market".
Source: Investing.com
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