Crude Oil Prices Hit Multi-Month Highs: Goldman Sees 25% Risk Premium Embedded As US-Iran Retaliatory Strikes Threaten Global Supply

Global energy markets entered a period of extreme volatility on Monday, with crude oil futures surging to their highest levels since early 2025. The spike follows a weekend of escalating military hostilities, including the death of Iran's Supreme Leader Ayatollah Ali Khamenei and retaliatory missile strikes by Tehran against U.S.-linked installations.

Goldman Sachs Sees Oil Above $90 Per Barrel

According to a Reuters report, Goldman Sachs analysts now estimate that a massive $18 per barrel “risk premium”—representing approximately 25% of current prices—is baked into the market as the threat of a prolonged blockade in the Strait of Hormuz becomes a reality.

Since the current futures prices of Brent are $77.57 and WTI are $71.21, the $18 risk premium accounts for roughly 23% to 25% of the total price above $90 per barrel. It anticipates the estimated impact easing to a $4 premium if Strait of Hormuz flows are cut by only 50% for a month.

Meanwhile,  Matthew Ryan, Head of Market Strategy at Ebury, told Benzinga that "An outright full closure of Iran's premier shipping lane is arguably the biggest risk for markets and could, we think, send oil futures surging towards the $100 a barrel mark."

Wood Mackenzie also warns that if the disruption persists, Brent crude could easily breach the $100 mark, as roughly 13 million barrels per day would remain inaccessible regardless of OPEC+ spare capacity.

Risk-Off Shift, Technical Outlook

Phillip Nova notes that investors have pivoted sharply toward a “risk-off” posture, seeking refuge in gold and the U.S. dollar while dumping cyclical assets. However, experts at Societe Generale suggest that the current price behavior—though sharp—remains “orderly.”

From a technical perspective, the rally faces stiff resistance. Matt Simpson, Senior Market Analyst at City Index, compared the current weekly crude chart to a daily VIX (Volatility Index) chart, suggesting that such vertical spikes rarely stay elevated for long.

Simpson warned traders to expect “some choppy trade around these highs,” noting that while the $18 premium is significant, the market has a history of rapidly retracing these “fear-driven” gaps once the initial shock subsides.

Price Action: The ETF tracking WTI crude, United States Oil Fund LP (NYSE:USO) closed 2.73% higher on Friday, before the conflict began.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo courtesy: Shutterstock