As the US-Iran conflict escalated, crude oil soared more than 3%, and oil was back above $100! Goldman Sachs warns that oil prices may rush to $120

The Zhitong Finance App learned that on Wednesday (September 10), international crude oil prices jumped more than 3%, mainly due to the sharp escalation of the military conflict between the US and Iran in the Persian Gulf region. The market is worried that energy transportation in the Strait of Hormuz will be blocked, and global supply risks are once again heating up.

By the close of the day, Brent crude futures rose 3.4% to close at $101.21 a barrel, the highest closing price since May 22; US WTI crude futures also rose 3.3% to close at $96.05 a barrel.

The military confrontation suddenly intensified. The US military confirmed on Tuesday that the US military destroyed five Iranian crude oil carriers in response to Iran's previous attack on US warships. The US Central Command said that the US warships successfully evaded the attack, and there were no casualties. This is another head-on exchange of fire about a month after the violent clashes between the two sides broke out in July. Although the US side turned its focus on putting economic pressure on Iran for some time, Iran continued to attack commercial ships in the Strait of Hormuz and surrounding waters, which eventually led to renewed fighting.

The rise in oil prices has rapidly spread to the terminal consumer market. Gasoline prices in the US hit a record high of $4.15 per gallon during the Labor Day holiday on Monday. Patrick DeHaan, head of petroleum analysis at energy analysis agency GasBuddy, warned on social media on Wednesday that US diesel prices are expected to break the $6 per gallon mark for the first time in the next few days, further increasing inflationary pressure.

The Wall Street Investment Bank issued a more aggressive warning for the future market. Daan Struven, co-head of global commodity research at Goldman Sachs, said in an interview with CNBC's “Asian Morning” program that with the increase in shipping attacks, the escalation of the US-Iran conflict (which has now been going on for seven months) is significantly increasing the risk of oil prices breaking through $120 per barrel. Goldman Sachs's benchmark scenario still predicts that exports to the Persian Gulf will gradually recover as producers adopt adaptation measures such as rerouting routes and additional pipeline capacity in the future; however, Struven pointed out that the recent escalation of tension has increased the probability of a “bullish scenario” occurring — that is, if oil tankers continue to be attacked, exports may not resume as scheduled in the next few months, thus driving oil prices to soar further.

Currently, the market is closely monitoring the traffic safety situation in the Strait of Hormuz and the next military or diplomatic developments between the US and Iran. Any new conflict could trigger sharp fluctuations in oil prices.