Goldman flags $120 oil risk if Middle East shipping attacks escalate
Goldman Sachs says that oil prices could climb as high as $120 a barrel if attacks on Middle East shipping escalate, as per Bloomberg report. This favors positions in natural gas and diesel to benefit from potential gains, as per the report. Daan Struyven, co-head of global commodities research, said recent developments indicate a meaningful risk that shipping disruptions could expand and intensify. Crude has risen to its highest level since July as the U.S. and Iran remain locked in a standoff over the Strait of Hormuz. The conflict, now more than six months old, has lifted a broad range of energy prices, with natural gas and petroleum products outperforming crude. Industrial fuel diesel has more than doubled this year. Brent was last trading near $92 at the time of writing this report. While Goldman sees significant upside for crude, Struyven said investors should hedge geopolitical...
Goldman Sachs said oil could rise to as much as $120 a barrel if attacks on Middle East shipping intensify, according to a Bloomberg report. Daan Struyven, the bank’s co-head of global commodities research, said recent developments point to a meaningful risk that shipping disruptions could widen and deepen. The firm said investors should hedge geopolitical risk by going long global natural gas and refined-oil products, saying supply disruptions are larger in those markets than in crude. Goldman also said oil could fall to $80 a barrel if regional exports return to normal, Struyven said.
Brent was last trading near $92 at the time of writing. Oil companies were urged to expand refining capacity in an effort to reduce fuel costs at the pump amid Iran war shocks, though the step may not be straightforward. S. equities declined.
The Wall Street Journal reported that Trump met with oil executives on Tuesday and pressed for a larger refining footprint. The report said expanding capacity could be a tough sell for producers because new refineries may be less profitable for the companies.