Could oil hit $120? Goldman warns as US-Iran attacks threaten Hormuz shipping | Business News

Goldman Sachs sees oil rising as high as $120 a barrel if attacks on Middle East shipping get worse. The bank warned that a bigger disruption to shipping could create a major supply shock for the oil market, according to Daan Struyven, co-head of global commodities research at Goldman Sachs.“Shipping disruptions” are becoming a bigger risk for oil prices. Struyven said recent events suggest that the risk of shipping disruptions spreading and becoming more severe is now an important concern, according to a Bloomberg report.Goldman Sachs oil price targetGoldman Sachs has two possible oil price scenarios. In its upside scenario, oil could climb to $120 a barrel if shipping and supply disruptions worsen. In a lower scenario, oil could fall to about $80 a barrel if Middle East exports return to normal, Struyven said.Brent crude was trading near $97 a barrel. Oil prices have climbed to their highest level since July as the US and Iran remain locked in a standoff over the Strait of Hormuz.Strait of Hormuz oil riskThe Strait of Hormuz has become the main focus of the oil market. About one-fifth of the world's oil supply used to pass through the waterway, making any disruption there a major threat to global energy supplies.US and Iranian attacks on vessels have increased concerns about a longer supply disruption. Washington has attacked Iranian oil tankers, while Iran has announced plans for a new restricted zone outside the Strait of Hormuz. US naval forces are also blockading Iranian ports. At the same time, American forces have been escorting vessels belonging to other oil-producing countries out of the region.Oil prices rise after US-Iran attacksOil prices jumped sharply last week after the US and Iran resumed attacks. Brent crude gained 7.8% last week, while US West Texas Intermediate crude rose by almost 10%, Reuters reported. Oil prices were still rising on Monday. Brent crude futures were up $0.26, or 0.8%, at $96.28 a barrel by 0806 GMT. US WTI crude was at $91.48 a barrel, up $0.18, or 0.2%.Also read: Why OPEC+ kept oil output unchanged as Iran war pushes Brent toward $100US Iran tanker attacksThe latest attacks have directly involved oil tankers. US forces struck three Iranian oil tankers on Saturday, including one near Kharg Island, an important Iranian oil export hub, US Central Command said.Iran also said it attacked vessels. The Islamic Revolutionary Guard Corps' navy said it targeted three oil tankers travelling through unauthorised routes in the Strait of Hormuz, along with three additional US vessels in other areas. The tanker attacks are being seen as a major escalation. Maritime intelligence firm Marisk said the Saturday attacks marked a “major escalation in the maritime conflict”, as noted by Reuters.Hormuz tanker traffic fallsCommercial ships are increasingly becoming part of the US-Iran conflict. Marisk said tankers are now being deliberately used as tools of economic pressure, making it harder to separate the military conflict from risks to normal commercial shipping, according to Reuters. Fewer ships are currently passing through Hormuz. An average of just 10 commodity ships a day crossed the Strait of Hormuz over the past 10 days, the lowest level since May, according to analytics firm Kpler.Oil supply shock warningA further fall in tanker traffic could push oil prices much higher. Priyanka Sachdeva, head of market insights at Phillip Nova, said the market could start pricing in a much bigger supply shock if tanker traffic slows significantly, according to Reuters. There are already signs that shipping activity is weakening. Sachdeva said the recent decline in tanker traffic suggests that the market is already beginning to face this risk.Iran plans to announce a restricted zone outside the Strait of Hormuz. Mohsen Rezaei, secretary of Iran's Supreme National Security Council, said on Sunday that the restricted zone would be announced in the coming days, according to Iranian state media, as cited by Reuters.Natural gas and diesel pricesGoldman Sachs is not only bullish on crude oil. The bank is also recommending investors consider natural gas and refined-oil products such as diesel to protect against the risks created by the conflict.Goldman believes the supply shock could be bigger in natural gas and refined products than in crude oil. Struyven said investors could hedge geopolitical risks by taking positions that benefit from higher prices in global natural gas and refined-oil products.Diesel prices have already seen a huge jump this year. Industrial fuel diesel has more than doubled in 2026, showing how strongly the conflict has affected energy products beyond crude oil. Energy prices have risen across the market during the war. The more than six-month conflict has pushed up natural gas and petroleum product prices, with these markets gaining more than crude oil.Also read: Why are the US and Iran attacking oil tankers? Could the Strait of Hormuz crisis push oil above $100?China oil imports and pricesChina could help prevent an even bigger jump in crude prices. Goldman Sachs expects China to continue acting as a “stabilizing force” in the crude market. China is expected to reduce oil imports when prices rise sharply.According to Struyven, China's response to high prices could help limit some of the upward pressure on crude oil. China may not provide the same support for natural gas and refined products. Struyven said China is not expected to play the same stabilizing role in those markets, according to Bloomberg.OPEC+ oil output unchangedOPEC+ did not change its October oil output policy. The producer group kept its oil output policy unchanged at its Sunday meeting, Reuters reported. OPEC+ still needs to agree on new production quotas. The group will need to settle new quotas before deciding its next steps on oil output.Middle East oil supply outlookAnalysts expect the US-Iran standoff to continue for some time. ANZ analysts said a prolonged standoff, combined with limited military action by both sides, appears to be the most likely scenario. That could delay the recovery of Middle East oil supplies.ANZ said continued tensions are likely to keep the region's oil exports below normal levels for longer. Middle East oil exports could remain constrained through the end of 2026. ANZ expects exports to stay limited for the rest of the year.A gradual reopening could begin late in the fourth quarter of 2026. However, the recovery is expected to happen slowly rather than immediately. A full return to pre-war oil flows could take until 2027. ANZ does not expect Middle East oil production and exports to return to pre-war levels until late Q1 or early Q2 of 2027.The key risk for oil prices is now shipping through Hormuz. If attacks continue and fewer tankers are able or willing to use the Strait, global oil supplies could tighten sharply. That is why Goldman Sachs sees a possible path to $120 oil. The bank's warning is based on the risk that the US-Iran conflict could expand from attacks on individual vessels into a much wider disruption of Middle East energy shipments.For now, the market is already pricing in a serious risk. With Brent near $97 a barrel, tanker traffic at its lowest level since May and exports expected to remain constrained, traders are watching the Strait of Hormuz closely for signs of a bigger supply shock.