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Investing.com - Oil prices have soared recently as the conflict between Israel and Iran has ramped up concerns over supply disruptions in the Middle East, and Goldman Sachs sees the potential for prices to rise above $90 a barrel in the near term.
At 05:55 ET (09:55 GMT), Brent oil futures for August dropped 0.7% to $73.70 a barrel and West Texas Intermediate crude futures fell 0.6% to $70.85 a barrel, handing back some of the recent gains after prices hit an over 4-month high on Friday.
Goldman Sachs has incorporated a higher geopolitical risk premium in its adjusted summer 2025 price path, but “we still assume no disruptions to oil supply in the Middle East and our forecast remains that strong supply growth outside U.S. shale will reduce Brent/WTI oil prices to $59/55 in 2025Q4 and to $56/52 in 2026.”
That said, the U.S. investment bank noted that geopolitical risks have risen sharply, and has thus estimated the upside price risk in alternative scenarios.
The first scenario assumes that any potential damage to Iran’s export infrastructure reduces Iran supply by 1.75 million barrels per day over six months before gradually recovering.
“Making the additional assumption that extra core OPEC+ production makes up half of the peak Iranian shortfall, we estimate that Brent jumps to a peak just over $90/bbl, but declines back to the $60s in 2026 as Iran supply recovers,” analyst at Goldman Sachs said, in a note.
Oil prices could rise even more sharply in extreme tail scenarios, where broader regional oil production or shipping is negatively affected, the bank added.
While an interruption of trade through the Strait of Hormuz, through which nearly 1/5 of global oil production flows, appears much less likely, there is focus from investors and policymakers on this risk, because core OPEC+ producers may be unable to deploy spare capacity in this extreme tail scenario.
“Based on our prior analysis we estimate that oil prices may exceed $100/bbl in an extreme tail scenario of an extended disruption,” Goldman said.