Goldman Sachs Warns Oil May Reach $120 After Trump Ends Iran Diplomacy

Brent crude was hovering near $97 a barrel on Monday after Goldman Sachs issued a forecast that oil prices could climb to $120. This followed President Trump's shift from diplomatic talks with Iran to a blockade.

Daan Struyven, co-head of global commodities research at Goldman, stated on Monday that the $120 threshold could be reached if attacks on shipping escalate and widen. In response, Iran is considering new approaches to broaden the standoff.

Goldman Predicts Oil at $120 as Diplomatic Efforts Fail

President Trump has replaced negotiations with military action, sanctions, and a blockade that stops Iranian imports and exports.

“isn’t worth the paper it’s written on”

Donald Trump made the remark in an interview with CNN.

The blockade has placed a strain on Iran's population, and Supreme Leader Mojtaba Khamenei has remained in hiding for six months.

Mohsen Rezaei, head of Iran's Supreme National Security Council, the nation's highest security authority, stated on Sunday that Iran requires a fresh approach to the blockade, negotiations, and the conflict itself.

He proposed a new exclusion zone covering the Persian Gulf and Gulf of Oman, broadening Iran's restrictions beyond the strait.

Additionally, Iran and Oman are discussing a temporary shipping lane, resurrecting the Hormuz corridor negotiations that temporarily decreased oil prices last month. It remains uncertain whether the US will agree to this arrangement.

Monday's alert is not the first from Goldman. The bank initially highlighted a potential return to $120 in July, several months before the current price surge.

Brent Approaches $100 as Attacks Expand

Brent crude climbed to near $98 per barrel on Monday, the highest since late July. The increase came after US strikes over the weekend on three Iranian tankers. Additionally, an attack on Monday struck Saudi Aramco, the state-run oil firm, in Jizan.

Energy Aspects, a research firm focused on oil markets, reports that global oil inventories excluding China have dropped significantly. Stockpiles have fallen by over 400 million barrels since the start of the conflict. Commodity funds are becoming more bullish as reserves approach a critical level, compounding the volatility affecting Wall Street.

Diesel prices have already reached record levels, trading at more than $100 per barrel above crude oil in the United States. Analysts view this as evidence that the supply squeeze is already underway.

Hamidreza Azizi, an Iran analyst at the International Crisis Group, a think tank focused on global conflicts, stated that Tehran probably seeks controlled escalation rather than all-out war. This could involve applying pressure on shipping, US military installations, or energy facilities.

He cautioned that a miscalculation, rather than deliberate intention, now poses the greatest danger of a broader conflict.