Brent crude is trading near $97 a barrel as Goldman Sachs warns oil could hit $120 after President Trump abandoned diplomacy with Iran for a blockade.

Daan Struyven, Goldman’s co-head of global commodities research, said Monday the $120 level is possible if shipping attacks broaden and intensify. Iran, meanwhile, is weighing new tactics to widen the standoff.

Goldman Sees Oil At $120 As Diplomacy Collapses

Trump has swapped negotiations for military strikes, sanctions, and a blockade halting Iranian imports and exports.

“isn’t worth the paper it’s written on”

Donald Trump, CNN

The pressure has left Iran’s population strained, while Supreme Leader Mojtaba Khamenei has stayed in hiding for six months.

Mohsen Rezaei heads Iran’s Supreme National Security Council, the country’s top security body. He said Sunday Iran needs a new strategy for the blockade, negotiations, and the war itself.

He floated a new exclusion zone across the Persian Gulf and Gulf of Oman, expanding Iran’s restrictions beyond the strait.

Iran and Oman are also negotiating a temporary route, reviving the Hormuz corridor talks that briefly cooled oil last month. Whether Washington will accept the arrangement is still an open question.

Monday’s warning is not Goldman’s first. The bank first flagged a possible return to $120 in July, months before the current price spike.

Brent Nears $100 As Attacks Widen

Brent rose towards $98 a barrel Monday, its highest level since late July. The gain followed weekend US strikes on three Iranian tankers. A Monday attack also hit Saudi Aramco, the Saudi state oil company, in Jizan.

Energy Aspects, an oil market research firm, says oil inventories outside China have fallen sharply. Reserves are down more than 400 million barrels since the war began. Commodity funds are turning bullish as reserves near a tipping point, adding to the pressure whipsawing Wall Street.

Diesel prices have already climbed to record highs, trading more than $100 a barrel above crude in the US. Analysts call it a sign the crunch is already here.

Hamidreza Azizi is an Iran analyst at the International Crisis Group, a global conflict think tank. He said Tehran likely wants calibrated escalation, not full-scale war. That could mean pressure on shipping, US bases, or energy sites.

He warned that miscalculation, not intent, is now the biggest risk of a wider war.

Source: BeInCrypto