Oil hits six-week high as U.S.-Iran clashes roil shipping

Goldman Sachs The Goldman Sachs Group, Inc. ↘ 1.03% warned that oil prices could surge to $120 a barrel if attacks on shipping in the Middle East continue to intensify, as a weekend escalation between the United States and Iran pushed Brent crude to a six-week high and deepened concerns about global inflation and tighter monetary policy.

Wall Street Sees Further Upside Risk

"Events over the last few days do suggest that the risk of shipping disruptions broadening and intensifying is an important one," Daan Struyven, co-head of global commodities research at Goldman Sachs, said in an interview on Bloomberg TV on Sunday. The bank recommended positions in natural gas and diesel as a way to capture gains from potential supply disruptions, which it said are larger in those markets than in crude. Goldman also noted that oil could fall back to $80 a barrel if regional exports return to normal.bloomberg+1

The warning followed a weekend of escalating hostilities. The U.S. military said on Saturday that it struck three Iranian oil tankers in response to Iran firing ballistic missiles at two Navy warships. Hours later, Iran's Revolutionary Guard announced it had targeted six additional ships, including three oil tankers in the Strait of Hormuz. On Monday, Saudi Aramco's Jazan refinery was hit by a fresh strike, according to the Financial Times, with the extent of the damage still being assessed.apnews+3

Oil Approaches $100 as Fed Rate Hike Bets Climb

Brent crude futures settled at $97.31 per barrel on Monday, up 1.1%, after touching $98.06 — their highest level since late July. The rally has reinforced expectations of tighter monetary policy from the Federal Reserve. According to the CME FedWatch Tool, traders see around a 58% chance of a rate hike at the Fed's September 15–16 meeting. Markets are also awaiting key inflation data, with the Producer Price Index due Thursday and the Consumer Price Index on Friday.tmgm+1

Francesco Pesole, FX strategist at ING ↘ 1.35%, noted that elevated energy prices, with Brent near $100 per barrel, are offering the dollar underlying support even as a sharp yen rally has weighed on the U.S. Dollar Index. ING targets EUR/USD at 1.150 over the coming weeks, driven in part by its call for a September Fed hike.investing

A Broader Pattern of Disruption

Goldman's $120 scenario is not new — the bank first flagged it in a July 20 note when estimated Persian Gulf flows had fallen below 45% of pre-war levels. But the weekend's tit-for-tat strikes have given the warning fresh urgency. Al Jazeera described the latest exchange as part of an expanding "tanker war" in which both sides are trying to exert control over the strategic waterway. Goldman's base case remains Brent averaging $80 a barrel in the fourth quarter, assuming de-escalation, a scenario that looks increasingly difficult to achieve.energynow+3