Shipping Disruptions Threaten to Push Oil Prices to $120

Global oil prices have been on the rise due to escalating tensions between the US and Iran over the Strait of Hormuz, a critical channel for global energy transport. According to Goldman Sachs, if shipping attacks continue to expand, oil prices could rapidly approach $120 per barrel.

The market has already priced in part of the geopolitical risk premium, but there is still considerable distance between current oil prices and $120. Daan Struyven, Co-Head of Global Commodities Research at Goldman Sachs, pointed out that a series of events over the past few days indicate that the expanding scope of shipping disruptions and the intensification of risks have become market variables that cannot be ignored.

The Strait of Hormuz is a key bottleneck in the transportation segment, and if vessel passage remains obstructed, oil-producing countries may be unable to steadily ship crude to Asia and other consumer markets. Recent tanker traffic has dropped to levels not seen since May, significantly heightening market concerns about ongoing supply chain disruptions.

Goldman Sachs also highlighted that rising costs for shipping insurance, freight, and difficulties in vessel scheduling could further amplify energy price volatility. The firm's research suggests that if crude oil exports from the Middle East return to normal and the supply risk premium dissipates rapidly, oil prices could fall back to $80 per barrel.

In addition to oil prices, Goldman Sachs also expressed a bullish outlook on energy products such as natural gas and diesel, citing signs of tightness in these markets. The firm noted that if shipping disruptions spread further, refined product and natural gas markets may face more severe supply shocks than the crude oil market.