Oil markets are facing renewed uncertainty as the ongoing shipping disruptions raise concerns over further disruptions to regional energy flows. 

Goldman Sachs sees Brent potentially reaching USD 120 per barrel if shipping disruptions broaden and intensify. The bank also sees Brent falling to USD 80 per barrel if regional exports normalize, while natural gas and refined products face larger supply shocks than crude.

Why You Should Care

The outlook highlights how quickly the Middle East conflict could feed into global energy markets. Goldman Sachs sees Brent potentially reaching USD 120 per barrel if shipping disruptions broaden and intensify, while a normalization of regional exports could push prices toward USD 80 per barrel.

The impact would extend beyond crude. Higher energy and fuel prices can affect transportation, manufacturing, power generation, and other energy-intensive sectors, while creating different effects for energy exporters and importers across MENA.

The Details

Goldman Sachs has identified a potential upside scenario for oil prices if shipping disruptions continue. Daan Struyven, the bank’s co-head of global commodities research, said recent developments have increased the importance of this risk.

Brent crude was trading near USD 97 per barrel, its highest level since July, as the United States and Iran remained in a standoff over the Strait of Hormuz.

The conflict has also pushed prices higher across other parts of the energy market. Natural gas and petroleum products have recorded stronger gains than crude, while industrial diesel prices have more than doubled this year.

Goldman Sachs therefore favors exposure to global natural gas and refined oil products as a way to hedge against geopolitical risks. The bank expects supply shocks in these markets to be larger than those affecting crude.

China could provide some support to the oil market if prices remain elevated. Goldman Sachs expects higher crude prices to encourage Chinese buyers to reduce imports, helping limit additional upward pressure. The bank does not expect the same dynamic to play as strongly in natural gas and refined products.

The Ripple

A prolonged disruption to regional energy flows could affect businesses well beyond the oil sector. Higher diesel and natural gas prices could increase operating costs for transportation, manufacturing, electricity generation, and other energy-intensive industries.

The impact across MENA would also depend on each economy’s position in the energy market. Higher hydrocarbon prices could support revenues for exporters, while importers and businesses exposed to fuel costs could face greater cost pressures.

What to Watch

The direction of the conflict and the extent of shipping disruptions around the Strait of Hormuz will remain the key variables for energy markets.

Goldman Sachs’ outlook reflects both scenarios: USD 120 per barrel if disruptions intensify and USD 80 if regional exports normalize. The performance of natural gas and refined petroleum products will also be worth watching, particularly if supply shocks in those markets continue to exceed those affecting crude.