Wall Street investment bank Goldman Sachs (NYSE: $GS) is warning that crude oil prices could be headed back to $120 U.S. a barrel as fighting intensifies between America and Iran.
Commodities analysts say crude oil prices are very likely to retest their high for the year of $120 U.S. a barrel if the Strait of Hormuz shipping corridor near Iran remains closed for longer.
“Escalation in the Middle East and the decline in estimated Persian Gulf flows to below 45% of pre-war levels have pushed oil prices back up,” writes Goldman Sachs in a note to clients.
The warning comes with Brent crude oil, the international standard, back above $90 U.S. a barrel on July 21, up more than 30% since the end of June.
Oil prices are again marching higher after a ceasefire between the U.S. and Iran crumbled and the two sides resumed their war.
Goldman Sachs and other commodity analysts have been forced to scramble and revise their oil forecasts multiple times as the U.S. and Iran alternate between peace and attacking each other.
Complicating the current outlook are reports that the Iran-backed Houthi military group in Yemen has started blockading oil shipments out of Saudi Arabia using a naval blockade in the Red Sea.
Saudi Arabia has been exporting most of its oil through the Red Sea as the Strait of Hormuz remains closed due to the fighting between the U.S. and Iran.
Crude oil prices rose just above $120 U.S. a barrel in April of this year as the battle between the U.S. and Iran hit its most intense phase.
Prices for crude oil then fell back towards $60 U.S. a barrel amid a short-lived ceasefire before rising again over the past 10 days.
GS stock has gained 52% in the last 12 months to trade at $1,072.98 U.S. per share.
