Oil prices climbed toward $100 a barrel on Tuesday as renewed attacks on Middle Eastern energy infrastructure and shipping intensified concerns about global supply. Goldman Sachs is now warning that a prolonged disruption in the Persian Gulf could send Brent crude as high as $120.
Brent crude futures rose briefly crossed $99 earlier on Tuesday before pairing some gains. U.S. West Texas Intermediate futures also climbed, topping $92 per barrel.
The gains brought the international benchmark close to a level last approached in July. The immediate catalyst was a wave of Houthi attacks on southern Saudi Arabia. The kingdom reported strikes on energy and civilian facilities in several cities, including Jazan, Abha, Najran and Khamis Mushait.
The attacks injured 73 people and caused fires and temporary shutdowns at some energy sites. The disruption raised fresh concerns about Saudi Arabia's ability to maintain exports while shipping routes remain under pressure.
The latest bout of violence comes as the U.S.-Iran conflict enters its sixth month. Over the weekend, U.S. forces struck three Iranian crude oil tankers after Iran's Revolutionary Guard Corps launched ballistic missiles at two American Navy warships, according to U.S. Central Command. Two tankers were permanently disabled, and a third was destroyed, while no U.S. service members were harmed, the military said.
The renewed hostilities have complicated efforts to restore normal traffic through the Strait of Hormuz, a critical waterway that handled roughly one-fifth of global oil volumes before the war. Saudi Arabia and other Gulf producers have relied on pipelines and alternative export routes to bypass the strait, but those workarounds cannot fully replace its capacity.
Goldman Sachs raised its oil price forecasts this week, citing the prospect of prolonged shipping disruptions. The bank now expects Brent to trade at $85 a barrel in December and WTI at $80, both $5 above its previous estimates. Its 2027 forecasts stand at $80 for Brent and $75 for WTI.
Those baseline projections remain below current prices, but the bank's downside supply scenario is considerably more severe. Goldman warned that Brent could reach or exceed $120 if Gulf production and exports remain significantly constrained, particularly if attacks on vessels in the Strait of Hormuz and Red Sea intensify.
One reason crude has not climbed even higher is the way the market has absorbed the supply shock. Goldman analysts said commercial oil inventories in OECD countries have experienced relatively limited drawdowns, while governments have released strategic reserves and other supplies have come from oil already at sea and inventories held in China. Those buffers have helped prevent a more dramatic price surge, but they are not unlimited.
For American consumers, the pressure is already visible at the pump. The national average gasoline price reached $4.15 a gallon on Tuesday, according to AAA, compared with $4.02 a month earlier.
Diplomacy remains another variable. Iran said Monday that an agreement with Oman to establish a temporary safe shipping route through Hormuz was close, although the arrangement would not include the United States, according to the report. The competing signals of negotiations and military escalation have left markets uncertain about how long the disruption will last.
