Goldman Sachs: Oil could hit $120 if shipping attacks widen

Key Points

1. Goldman Sachs said crude could reach $120 a barrel if Middle East shipping attacks expand.
2. Brent trades near $97, its highest since July, with Washington and Tehran deadlocked over Hormuz.
3. The bank is steering investors toward natural gas and refined products rather than crude itself.

The latest:

Crude could climb to $120 a barrel if attacks on Middle East shipping widen, Goldman Sachs said, while setting a downside target of $80 should regional exports normalize. Dan Struyven, the bank’s co-head of global commodities research, told Bloomberg Television that events of recent days already point to a significant risk of broader, more intense shipping disruption.

Details:

• The call: Goldman Sachs recommended that investors bet on natural gas and diesel to capture any gains from escalation, rather than positioning in crude. Struyven advised hedging geopolitical risk through long positions in global natural gas and refined oil products, saying supply shocks there are larger than in the crude market itself.
• The price: Brent crude rose to its highest level since July, trading near $97 a barrel, according to the report. The move came with no resolution in sight between Washington and Tehran over the Strait of Hormuz, the chokepoint at the center of the standoff.
• The two scenarios: Alongside the $120 upside case tied to widening attacks, Struyven set a lower target of $80 a barrel if exports from the region return to normal. The bank did not attach a timeline to either outcome.
• On the water: US forces have attacked Iranian tankers in recent days, according to the report. Tehran plans to declare a new prohibited zone outside the waterway, while the US Navy continues to blockade Iranian ports and escort tankers belonging to other producers.
• The spread: More than six months of military deadlock has lifted prices across a wide range of energy sources, with natural gas and refined products outpacing crude. Industrial diesel has more than doubled in price this year, the sharpest move cited in the bank’s assessment.
• China’s role: Struyven expects China to keep acting as a stabilizing force in the crude market by curbing its imports in response to higher prices. He does not expect Beijing to play the same balancing role in natural gas or refined product markets.
• Why products lead: The bank’s reasoning rests on the gap between raw crude and processed fuels: disruption to shipping and refining hits diesel and gas supply harder than it hits barrels of crude, leaving those markets more exposed to any further escalation.

Background:

The Strait of Hormuz is the transit route for a large share of seaborne Gulf energy exports. The current standoff has run more than six months, according to the report, without a negotiated settlement between Washington and Tehran.

Between the lines:

Goldman’s advice implies escalation risk is already priced into crude more fully than into fuels. With Brent near $97 and diesel up more than 100% this year, the bank sees the next leg of any shock landing in gas and refined products. Its $80 scenario also signals the current premium is treated as reversible, not structural.

What’s next

Watch Tehran’s formal declaration of the new prohibited zone outside Hormuz, further US strikes on Iranian tankers, and whether Chinese crude import volumes fall as prices rise.