Brent crude could surge above $120 a barrel because of intensified attacks on shipping in the Strait of Hormuz and Red Sea, Goldman Sachs warned in a new oil price forecast.

"Markets are increasingly pricing a prolonged Mideast conflict," the bank's analysts said in a research note Monday evening.

Goldman said its baseline assumption was now that Middle East shipping disruptions would continue into next year. It predicted that $120 oil could become the norm in 2027 under its most pessimistic scenario for Middle East crude production, in which the region's oil exports remain bottlenecked because of persistent tensions.

In its baseline scenario, Goldman raised its December 2026 price forecast for Brent to $85 a barrel, from $80 earlier. The bank noted that growing supplies from the U.S. and other producers outside the Middle East could help offset the impact of disruptions in the region.