Oil Prices Could Hit $120 Per Barrel Amid Escalating Middle East Tensions

Oil prices could surge above $120 per barrel due to heightened attacks in the Persian Gulf and Red Sea, according to Goldman Sachs. The investment bank warns that this would add to the already soaring fuel costs faced by Americans since the Iran war began.

The forecast implies a roughly 20% increase in Brent crude prices, which are currently trading at nearly $100 per barrel. This would have a significant impact on consumers, who have spent an additional $100 billion on fuel between February 28 and September 8, according to a tracker from Brown University.

The price of diesel has reached a record high of $5.90 per gallon, squeezing household budgets directly at the pump and indirectly by raising transportation costs for groceries and other retail goods. Inflation remains elevated, with economists forecasting that the next Consumer Price Index report will show inflation in August rose by 3.3% on an annual basis.

GOLDMAN'S FORECAST IS BASED ON AN INCREASE IN HOSTILITIES IN THE MIDDLE EAST. The bank's base case calls for Brent to drop to $85 per barrel by year-end, with West Texas Intermediate settling at about $80 per barrel.