As tensions between the United States and Iran escalate further, market fears of more disruptions to Middle East energy supplies have grown, lifting international oil prices on Wednesday. Brent crude briefly neared $100 per barrel.

US benchmark West Texas Intermediate (WTI) October contract rose 1.75% to settle at $94.66 per barrel. International benchmark Brent crude futures climbed 1.55% to $99.44 per barrel. The oil price rally was mainly driven by geopolitical risks, as traders worry the conflict may disrupt crude oil transportation and exports.

US-Iran Tensions Flare Up Again

The US military destroyed five Iranian crude oil tankers on Tuesday in retaliation for an Iranian attempt to attack a US warship. US Central Command (Centcom) stated in a release that the US warship evaded the Iranian attack and no US personnel were injured in the incident.

This means confrontation between the US and Iran has entered a high-tension phase again after a brief détente. Previously, military operations on both sides were suspended for roughly one month. Washington once shifted to applying economic pressure on Tehran, but resumed strikes at the end of last month.

Goldman Sachs Warns Oil Prices Could Surge to $120

Daan Struyven, Co-Head of Global Commodities Research at Goldman Sachs, said that with mounting attacks on shipping, it is "entirely possible" for oil prices to rise above $120 per barrel.

In an interview with CNBC’s Squawk Box ASIa, he said Goldman Sachs’ base case still assumes PeRSIan Gulf exports will gradually recover, and oil-producing nations will adapt to disruptions via alternative shipping routes and eventual additional pipeline capacity.

However, Struyven noted that the recent escalation has raised the odds of a more bullish scenario where exports fail to rebound in the coming months. He said developments over the past few days show the probability of Brent crude breaking above $120 is rising as shipping attacks "intensify and expand".

Market participants widely watch that if security for Middle East shipping keeps deteriorating, crude supply chains may face greater disturbances and oil price volatility could expand further. For energy markets, current prices are close to a key round-number threshold. Subsequent trends will heavily depend on whether the conflict spills over and the pace of export recovery.