Goldman Sachs announced that Brent crude oil may exceed $120 per barrel in the last quarter of this year, and average $100 per barrel next year, if supply disruptions through the Strait of Hormuz continue and Gulf production does not fully recover until the end of 2027.

Oil prices fell on Tuesday as markets weighed reports indicating mediation efforts between the United States and Iran on one hand, and new exchanges of attacks between the two sides and threats by Yemen's Houthis to impose a naval blockade on the Bab el-Mandeb Strait on the other.

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Brent crude futures fell 0.3 percent to $88.83 per barrel by 0247 GMT, while US West Texas Intermediate crude for September delivery settled at $82.49 per barrel. Both contracts had hit their highest levels in more than a month in the previous session.

Analysts said in a note that the latest escalation in the Middle East and the estimated drop in flows from Gulf countries to below 45 percent of pre-war levels pose risks that could raise Goldman Sachs' forecasts of $80 per barrel for the fourth quarter and $75 for 2027, which assumed a de-escalation of tensions in the last quarter of this year.