Oil Prices Soar Amid Escalating Middle East Tensions

Oil prices are poised to surge if attacks on shipping in the Middle East escalate, according to Goldman Sachs. The bank has set an upside scenario of $120 a barrel for crude oil, while its co-head of global commodities research, Daan Struyven, sees a downside target of $80 if exports from the region return to normal.

The current standoff between the US and Iran over the Strait of Hormuz has led to a surge in crude prices, which have climbed to their highest level since July. Brent crude was last trading near $97 a barrel.

Struyven notes that while oil prices may rise, investors should consider hedging against geopolitical risks by going long on natural gas and refined-oil products. He explains that supply shocks are bigger in these markets than in the crude market.