Goldman Sachs Issues Alert on Oil Prices: Crude Could Exceed $120 Amid Ongoing Strait of Hormuz Disruptions
Are Brent crude oil prices set to cross $120 per barrel again? Goldman Sachs Group has indicated that Brent crude could exceed $120 a barrel in the fourth quarter if disruptions in the Strait of Hormuz persist. However, this scenario is not part of the bank’s central forecast. Global energy markets have seen significant volatility this month, with Brent crude rising above $91 a barrel due to renewed tensions between the US and Iran.
Market sentiment has been further impacted by threats from Iran-backed Houthi rebels in Yemen, who have suggested a blockade on Saudi shipments. The importance of oil exports through the Red Sea has increased as they help transport crude from the disrupted Persian Gulf to global buyers.
Goldman warns of crude at $120
In a note dated July 20, Goldman Sachs analysts stated that escalating tensions in the Middle East and a decline in estimated Persian Gulf oil flows to below 45% of pre-war levels have contributed to rising oil prices. According to a Bloomberg report, Goldman’s base-case scenario assumes a de-escalation of tensions in the region, predicting Brent crude to average $80 a barrel in the fourth quarter and $75 a barrel next year. However, the analysts noted that risks to this outlook are “tilted to the upside” due to ongoing shipping disruptions in the Strait of Hormuz and potential further interruptions in the Red Sea.
The analysts also pointed out that the decline in global oil inventories during the second quarter has made the market more vulnerable to supply disruptions. They mentioned that weaker crude imports from China, along with higher demand elasticity, could help moderate the extent of any price rally. For investors concerned about prolonged geopolitical risks from the Middle East and Russia, Goldman recommended taking a long position in the European diesel timespread for the period between December 2026 and March 2027.
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