Oil could rise to as high as $120 a barrel if attacks on shipping in the Middle East increase, according to Goldman Sachs, which recommended betting on natural gas and diesel as a way to capitalize on gains.
Dan Struveen, co-head of global commodities research, said in an interview that events over the past few days already indicate that the widening and intensifying shipping disruptions pose a significant risk.
Crude oil prices rose to their highest level since July, as the United States and Iran remained at a standoff over the Strait of Hormuz. In recent days, Washington has attacked Iranian tankers, while Tehran plans to declare a new restricted zone outside the waterway. The US Navy also continues its blockade of Iranian ports and is escorting other oil-producing vessels out of the country.
In addition to what Goldman Sachs calls a scenario of prices rising to $120 a barrel, the bank also has a lower target of $80 if the region's exports return to normal, according to Stroyven. Brent crude was recently trading near $97.
The stalemate, after more than six months of war, has boosted prices for a wide range of energy sources, with natural gas and petroleum products outperforming crude oil. The price of diesel used as an industrial fuel has more than doubled this year.
Struveen, referring to bets on rising prices, said: “While we see significant upside potential for crude oil prices, we recommend that investors hedge against geopolitical risks by taking long positions in global natural gas and refined petroleum products. Supply shocks are greater than those in the crude market.”
China is expected to continue playing a stabilizing role in the crude oil market by curbing imports in response to rising prices, according to Stroyven. He noted that it does not play the same role in natural gas and refined products.
