Goldman Sachs expects energy prices to rise amid escalation in Middle East

Goldman Sachs flags the possibility of higher oil and gas prices following the US intervention in the Middle East conflict, with the company’s base-case scenario hinging on significant disruptions to energy supplies from the region.

According to analysts at the bank, if oil flows through the Strait of Hormuz fall by half for a month and remain 10% lower for the next 11 months, the price of Brent crude will surge briefly to $110 per barrel. The grade will reach a high of $90 in case of a reduction in Iranian supplies by 1.75 million barrels per day.

Meanwhile, the bank still expects no major disruptions to oil and gas flows from the Middle East. However, the analysts note increased risks of higher energy prices and lower supplies from the region. 

The price of natural gas could also rise. Goldman Sachs says European benchmark Title Transfer Facility (TTF) may jump to 74 euros per megawatt hour. Sustained disruptions in supplies through the Strait of Hormuz will drive fuel prices up to 100 euros per megawatt hour, analysts add.