Goldman Sachs Warns of Oil Price Surge to $120 per Barrel Amid Middle East Disruptions

Goldman Sachs warns that oil prices could surge to $120 per barrel if attacks on shipping in the Middle East intensify and disruptions around the Strait of Hormuz persist. The investment bank's co-head of global commodities research notes that recent developments indicate a growing risk of shipping disruptions, which has become an important concern for global oil markets.

Brent crude was trading above $97 per barrel at the time of reporting, reaching its highest level since July. Goldman Sachs maintains an upside oil price scenario of $120 per barrel if disruptions around Hormuz continue, but also sees a downside scenario of $80 per barrel if oil exports from the region return to normal levels.

The bank recommends that investors consider positions in European natural gas and refined oil products as a hedge against increasing geopolitical risks. Goldman Sachs expects China to act as a stabilizing force in the crude oil market by reducing imports in response to higher prices, but does not expect this role to extend to natural gas and refined petroleum products.