Goldman Sachs has warned that further attacks in the Persian Gulf and Red Sea could send global oil prices above $120 per barrel, potentially worsening the fuel cost pressures already facing American consumers amid the ongoing Iran war.
The investment bank’s projection would represent an increase of about 20% from the current price of Brent crude, the international benchmark, which is trading close to $100 per barrel.
Oil prices have risen sharply in recent weeks as fighting in the Middle East continues. US military forces struck three Iranian oil tankers on Saturday, while Houthi rebels also attacked oil facilities in Saudi Arabia.
Brent crude briefly reached $99.46 per barrel on Tuesday before falling to $97.85. The benchmark has risen from around $72 per barrel over the past two months as escalating conflict reduces expectations of an agreement that could allow the Strait of Hormuz to reopen.
The strategic waterway normally handles about one-fifth of global oil supplies.
$100bn Fuel Cost Increase
American consumers spent an additional $100 billion on fuel between February 28, when the Iran war began, and September 8, according to a tracker by Brown University.
Of the additional spending, about $55 billion came from higher gasoline costs, while diesel accounted for approximately $45 billion.
Diesel prices, which affect major industries such as trucking, construction, agriculture and rail transportation, reached a record $5.90 per gallon on Labor Day, according to AAA data.
The rising costs are affecting households both directly through higher prices at petrol stations and indirectly through increased transportation expenses for food and other consumer goods.
Inflation also remains elevated. Economists expect the Consumer Price Index report due on Friday to show that annual inflation rose to 3.3% in August, significantly above the Federal Reserve’s 2% target.
GasBuddy petroleum analyst Patrick De Haan warned that higher fuel prices could persist, particularly for diesel.
“This is the time of year that most Americans see gas prices going down as demand falls and we soon change to winter gasoline, but as of late, we’ve been seeing a lot more ups — especially for diesel — the fuel that drives the U.S. economy, and that may continue,” De Haan said in a September 7 social media post.
The US government is also expected to release its August Producer Price Index on Thursday. Economists are forecasting that wholesale inflation accelerated to 5.4% from 4.7% in July.
Goldman’s Base Forecast
Despite the warning about a possible surge above $120 per barrel, Goldman Sachs’ main projection remains more moderate.
The bank expects Brent crude to fall to $85 per barrel by the end of the year, while West Texas Intermediate, the US benchmark, is projected to settle around $80. Both forecasts are $5 higher than Goldman’s previous estimates.
“The price upgrade is modest despite the assumption that shipping disruptions continue for two reasons,” Goldman analysts wrote in a September 7 research report.
The analysts pointed to relatively stable commercial fuel inventories in developed economies and expectations that oil shipments from the Middle East will gradually recover.
The Trump administration, meanwhile, expects oil prices to fall below their pre-war levels once the conflict ends.
US Treasury Secretary Scott Bessent told Fox News on Sunday that the energy supply shock “is going to end.”
“On the other side of this, we actually could see oil prices at $40 or $50 [a barrel] because there’s so much supply coming on,” Bessent said.
Goldman Sachs said its most favourable scenario could see Brent fall into the $60-per-barrel range in 2027. However, that would require oil production in the Persian Gulf to rise by 1 million barrels per day above pre-war levels.
The bank said the risks surrounding its forecast remain largely tilted towards higher prices, particularly in the short term.
“Risks to our price forecast remain significantly tilted to the upside on net, especially near-term,” the analysts said.
Markets are also increasingly preparing for the possibility of a prolonged conflict. According to Goldman Sachs, options markets now indicate a 25% chance that Brent crude will remain above $100 per barrel in March 2027, compared with just 6% a month earlier
