Goldman Sachs has issued a warning that Brent crude oil prices could surge to $120 per barrel if the Strait of Hormuz remains closed due to the ongoing US-Iran conflict. This potential scenario, which could result in the largest supply disruption in oil market history, may lead to a systemic supply shock of 15-20 million barrels per day. Current oil prices show Brent crude at approximately $86.50 per barrel and WTI crude near $80.66 per barrel. This warning comes amid a delicate geopolitical environment, where preliminary US-Iran negotiations have been announced to potentially reopen the strait.

Key Takeaways

• Market activity suggests increased expectations for higher WTI prices, with a notable rise in the probability of reaching $90 per barrel.
• Goldman Sachs’ warning appears to impact market sentiment, reflecting concerns over a prolonged closure of the Strait of Hormuz.
• The market pricing for WTI hitting $120 in July is currently low, but the warning reflects a significant risk scenario.

What to Watch

Markets will be closely monitoring any developments regarding the Strait of Hormuz. Key indicators include official announcements from the Iranian Ministry of Shipping and potential geopolitical escalations. Additionally, updates on US-Iran negotiations and actions by OPEC+ will be critical in shaping future market expectations. A prolonged closure of the strait or failed diplomatic efforts could further support scenarios of elevated oil prices.

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