Escalating conflict between the US and Iran, combined with Houthi attacks on Saudi infrastructure, has pushed Brent and WTI benchmarks to two-month highs, prompting Goldman Sachs to revise its price targets upward.
WTI crude prices rose 2.7% to $94 per barrel as escalating Middle East hostilities, specifically attacks on Saudi energy facilities and US-Iran military clashes, stoked supply concerns. The market is reacting to the potential for further disruptions in the Strait of Hormuz, which remains a critical chokepoint for global oil transit.
Goldman Sachs raised its December forecast for WTI to $80 per barrel.
Analysts note that drawdowns of commercial stocks and reserves held by China have helped mitigate the impact of supply disruptions.
Brent crude futures climbed 2.3% to $98.50 per barrel, driven by the heightened geopolitical risk in the Middle East and the threat of prolonged shipping disruptions in the Red Sea and Strait of Hormuz. The market is pricing in a global supply deficit as transit volumes remain below pre-war levels.
Intensified attacks on shipping through the Strait of Hormuz and the Red Sea are considered the most likely trigger for price increases.
The waterway handled roughly 20% of the world's oil volumes before the war.
Oil prices surged on Tuesday as renewed hostilities in the Middle East and attacks on Saudi energy facilities stoked supply fears. Brent crude climbed 2.3% to $98.50 per barrel, while WTI rose 2.7% to $94, marking a two-month high. Goldman Sachs analysts warned that prices could reach $120 if shipping disruptions in the Strait of Hormuz persist.
Prices are climbing due to a combination of physical supply disruptions from Houthi attacks on Saudi facilities and heightened military tensions between the US and Iran, which threaten critical shipping routes in the Strait of Hormuz.