Oil prices could surge as high as $120 per barrel if attacks on Middle East shipping do not stop, Goldman Sachs has warned. This would be the highest oil prices have hit since the US and Israel launched their war on Iran on 28 February. Brent crude, the international benchmark, peaked at $114 per barrel on 4 May.
The US and Iran have been unable to address a stalemate over the management of the Strait of Hormuz, through which one fifth of the world’s oil passed during peace time. Tehran said on Monday it will unveil new sanctions for ships trying to pass through the strait following a weekend of renewed exchanges with the US, casting fresh doubt on progress towards an end to the conflict. Mohsen Rezaei, the secretary of Iran’s supreme national security council, told state TV on Sunday that Tehran will announce a new ‘exclusion zone’ outside of the waterway in the coming days.
He said any ship seen entering the new restricted zone would be added to a sanctions list, reiterating that the waterway would only fully open again once the Americans “stop the sabotage, threats and attacks on Iran”. Iran and the United States traded fire again over the weekend, with the price of Brent crude now above $97 per barrel, driving Hormuz traffic down to its lowest since May. Rallying Brent crude prices could surpass $100 per barrel for the first time since 23 July, which was the only day that it has risen above this benchmark since 22 May.
Goldman Sachs sees “meaningful upside to crude oil prices”, but said that in gas and fuels, the “supply shocks are bigger than in the crude market”. Attacks on shipping in the Strait of Hormuz are showing further signs of intensifying. The US claimed strikes on three Iranian oil tankers, including one off the coast of Kharg Island, after Iran’s Islamic Revolutionary Guard Corps launched ballistic missiles at two American naval vessels.
An average of ten commodity ships transited the Strait of Hormuz each day over the past 10 days, the lowest since May, according to shipping data on Monday, after US and Iranian strikes on tankers. The 10-day moving average was 10 on Sunday, down from more than 15 on Friday and nearly 13 on Saturday, data from analytics firm Kpler found. Join thought-provoking conversations, follow other Independent readers and see their replies
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