Goldman Sachs warns oil could hit $120 if Strait of Hormuz stays closed

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.