Goldman Sachs has cautioned that oil prices could climb to $120 per barrel if attacks on vessels in the Middle East escalate further, while simultaneously advising investors to take long positions in natural gas and refined fuels to capture potential gains. "Events over the past few days indicate that the risk of shipping disruption widening and worsening further cannot be overlooked," said Daan Struyven, co-head of global commodities research at the firm, in an interview.
Crude prices have already risen to their highest levels since July as the United States and Iran remain locked in a standoff over the Strait of Hormuz. Recently, Washington has struck Iranian tankers, while Tehran has announced the creation of a new restricted zone beyond the strait. The U.S. Navy has also continued to block Iranian ports and has been escorting vessels from other oil producers away from the affected waters.
Struyven noted that beyond the firm's bullish scenario of $120 per barrel, there is a lower target of $80 if regional export flows return to normal. Brent crude was last trading near $97 per barrel. "While we believe crude prices still have significant upside potential, we suggest investors hedge geopolitical risks by going long on global natural gas and refined products," he said regarding the bets on price increases. "These markets are experiencing more severe supply shocks than the crude oil market."
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