Goldman Sachs Warns Oil Prices Could Hit $120 Amid US-Iran Tensions

Geopolitical Escalation and Maritime Supply Shocks

The latest wave of hostility in the Persian Gulf has directly impacted physical supply chains. On September 5, 2026, the United States military announced the destruction of three Iranian vessels off the coast of Jarg Island in the Gulf of Oman. This kinetic action followed an exchange where the Iranian Islamic Revolutionary Guard Corps opened fire on United States warships. Brad Cooper, commander of the United States Central Command (Centcom), issued a stark economic warning regarding future engagements, stating that any hostile fire directed at American vessels would incur a heavier economic toll through the neutralization of additional Iranian assets.

On September 7, 2026, West Texas Intermediate (WTI) crude surpassed USD 93 per barrel by mid-morning, building upon a close of USD 91.48 the previous trading session and climbing significantly from an early September baseline near USD 89. Concurrently, international benchmark Brent crude traded at USD 93.52 per barrel. This persistent upward pressure reflects an expanding security premium embedded directly into energy futures.

Diverging Price Scenarios and Structural Risk Hedging

Goldman Sachs outlined a dual-track forecast framework for energy markets. The upper bound targets USD 120 per barrel under an acute disruption scenario, while a lower baseline of USD 80 per barrel assumes normalization of regional hydrocarbon exports. To navigate this volatility, executive leadership at Goldman Sachs recommends that institutional investors deploy risk management strategies by holding long positions in global natural gas and refined petroleum products.

Infrastructure Expansion and Long-Term Vulnerabilities

Beyond immediate military friction, structural vulnerabilities surrounding the Strait of Ormuz remain a primary driver of long-term asset pricing. Goldman Sachs analysts, including Alexandra Paulus, noted that the bank raised its long-term oil price assumption by USD 9 per barrel up to USD 76 during the peak of the United States-Iran conflict. This adjustment accounts for an elevated structural security premium tied to chokepoint reliance.

Relief could materialize through regional pipeline development. Goldman Sachs estimates that ongoing and planned pipeline infrastructure projects across the Middle East could isolate more than 45% of pre-war Persian Gulf export levels from Ormuz vulnerabilities by the end of 2027. This mitigation capacity is projected to expand past 60% by the end of 2028, and potentially reach 75% under an accelerated construction schedule. Effective pipeline capacity is forecasted to increase significantly by late 2027, scaling to an accumulated volume by the end of 2028, basándose en siete oleoductos ya en construcción, en fase de planificación o en consideración.