Brent Crude Hits $97.20 as US-Iran Strikes Escalate Mideast Tensions
Key Points
- Brent crude gained 0.20% to $97.20 per barrel on Tuesday, marking a third consecutive day of gains at six-week highs.
- The U.S. military struck three Iranian oil tankers on Saturday after Iran launched ballistic missiles at two Navy warships.
- Goldman Sachs raised December 2026 Brent price forecasts by $5 to $85 per barrel and expects Mideast shipping disruptions to continue into 2027.
Escalatory rhetoric from both sides continued to fuel market concerns. Defense Secretary Pete Hegseth posted that the U.S. "will destroy (and sink)" Iranian oil tankers if Iran fires on U.S. vessels. Iranian Parliament Speaker Mohammad Bagher Ghalibaf responded Monday with a post on X stating "Strike our assets and you get struck."
Goldman Sachs Raises Oil Price Forecasts on Prolonged Conflict Outlook
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Goldman Sachs on Monday raised its forecasts for both benchmark crude prices, citing expectations of extended regional disruptions. The bank increased its December 2026 Brent crude forecast by $5 to $85 per barrel and raised its 2027 forecast to $80 per barrel. For U.S. crude, Goldman raised December 2026 WTI forecasts by $5 to $80 per barrel with 2027 projections at $75 per barrel.
The investment bank explicitly stated "Markets are increasingly pricing a prolonged Mideast conflict," noting that Persian Gulf-to-China crude tanker rates for the second quarter of 2027 now reflect shipping disruptions lasting through that period. Goldman expects Mideast shipping disruptions to continue into 2027, with production gradually recovering by the second half of 2027.
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President Trump projected a different outcome Monday, posting that "Oil prices will drop precipitously ... when we WIN the war with Iran," framing the regional conflict as a near-term resolution scenario.
The market's pricing reveals a critical divergence: while Trump's rhetoric suggests a rapid resolution would lower crude prices, Goldman Sachs' multi-year price elevation ($5 increases for 2026 and sustained $80-$85 Brent levels) embeds the assumption that geopolitical resolution will take years, not months. This suggests oil traders are discounting the probability of near-term de-escalation and instead positioning for what the bank explicitly names a "prolonged" conflict requiring shipping insurance premiums through at least mid-2027.
Market Outlook
Goldman Sachs expects Brent crude to average $85 per barrel in December 2026 and $80 in 2027, assuming Mideast shipping disruptions persist through mid-2027. If tensions escalate further without diplomatic intervention, prices could test $100 per barrel. Conversely, any concrete Iran nuclear agreement or US-Iran diplomatic progress would likely trigger a sharp reversal, potentially driving prices below current levels within weeks.
Sources: CNBC and other international news outlets.
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