Goldman Sachs warns of energy supply risks as Middle East tensions threaten the Strait of Hormuz, potentially driving up oil and gas prices, the bank said in a note on Sunday.
The bank estimated that Brent crude could briefly hit $110 per barrel if oil flows through the critical waterway were halved for a month, before dropping by 10 percent over the following 11 months.
Prices are expected to average around $95 per barrel by late 2025, it added.
Oil prices surged on Monday to their highest levels since January after the United States, alongside Israel, attacked Iranian nuclear sites, escalating conflict in the Middle East.
Brent crude futures rose by $1.92 or 2.49 percent at $78.93 a barrel as of 0117 GMT, while US West Texas Intermediate crude advanced $1.89 or 2.56 percent to $75.73.
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Both contracts jumped by more than 3 percent earlier in the session to $81.40 and $78.40, respectively, touching five-month highs before giving up some gains.
Iran's Supreme National Security Council is expected to decide whether to close the Strait of Hormuz after the country's parliament voted in favor of the step on June 22, according to media reports.
Connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea, the strait is one of the world's most important oil transit chokepoints, handling about one-fifth of global oil shipments.
Citing data from Polymarket, Goldman Sachs said prediction markets are pricing a 52 percent chance of Iran closing the strait in 2025.
It also warned that a drop of 1.75 million barrels per day in Iranian supply could push Brent crude to $90.
"While the events in the Middle East remain fluid, we think that the economic incentives, including for the US and China, to try to prevent a sustained and very large disruption of the Strait of Hormuz would be strong," the bank was cited by Reuters as saying.
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It also said the European natural gas markets are projected to price in a higher probability of disruption.
