Oil extends rally on Mideast Supply Risks as Goldman raises forecasts

Oil climbed for a third day on Wednesday as escalating hostilities between the US, Israel, and Iran heightened fears of supply disruptions across the Middle East, while Goldman Sachs lifted its oil price forecasts.

Brent futures rose 3.5 per cent to $84.25 a barrel by 08:40 GMT, after surging nearly 5 per cent on Tuesday and extending gains of about 7 per cent earlier this week. Crude Oil WTI Futures advanced 3.4 per cent to $77.10. Brent touched its highest level since July 2024 as traders priced in mounting geopolitical risk.

The conflict intensified after coordinated US and Israeli strikes on Iranian military targets over the weekend. Iran has since launched missiles and drones at neighbouring states hosting US bases and warned shipping operators transiting the Strait of Hormuz — a chokepoint that carries roughly 20 per cent of global oil supplies.

Concerns over the waterway, a critical route for exports from Saudi Arabia, Iraq, and the United Arab Emirates, have added a significant risk premium. ING said disruptions were beginning to ripple upstream, citing reports that Iraq curtailed output at the Rumaila and West Qurna 2 fields, potentially taking about 1.2 million barrels a day offline.

Goldman raised its second-quarter 2026 Brent forecast by $10 to $76 a barrel and its WTI outlook by $9 to $71, assuming reduced flows through Hormuz would tighten inventories. The bank said risks remain skewed to the upside, adding that Brent could reach $100 if disruptions persist for several weeks.

US President Donald Trump said the Navy would escort commercial vessels if needed to safeguard transit through the strait, after insurers reportedly pulled war-risk coverage. While efforts to secure shipping lanes may temper further gains, prolonged conflict risks stoking inflation and curbing demand, analysts said.

Attribution: Investing.com