Goldman Sachs Forecasts Oil at $120 Amid Strait of Hormuz Escalation

Analysts at Goldman Sachs estimate that oil prices could rise to $120 per barrel if attacks on tankers in the Strait of Hormuz and the Red Sea escalate. Consequently, the bank recommends that investors increase their exposure to natural gas and diesel to capitalize on rising prices.

Daan Struyven, head of commodities research at Goldman Sachs, stated in an interview with Bloomberg:

"The events of recent days indicate that the risk of shipping disruptions is expanding and intensifying."

Conversely, the bank estimates that the price of oil could drop to $80 per barrel if exports from the region return to normal levels.

Escalation and Energy Market Impact

Oil prices have climbed to their highest level since July amid recent military exchanges between the US and Iran, and fading prospects for an agreement. In recent days, the US targeted Iranian tankers, while Iran declared a new restricted zone outside the strait. US forces also continue to block access to Iranian ports.

This situation, six months since the outbreak of the war, has driven up prices across a broad spectrum of energy products. Price increases for natural gas and refined petroleum products have been sharper than those for crude oil, while the price of industrial diesel has more than doubled since the beginning of the year.

Investment Recommendations

Struyven elaborated on the hedging strategy:

"While we see significant upside potential for crude oil prices, we recommend that investors hedge geopolitical risks through long positions in natural gas and refined petroleum products globally. Supply-side disruptions are larger here than in the crude oil market."

According to Struyven, China is expected to continue serving as a "stabilizing force" in the crude oil market, curbing imports in response to high prices.