Goldman Sachs has warned that oil prices could rise to as much as $120 a barrel if attacks on ships in the Middle East intensify and disrupt crude supplies further.

Daan Struyven, co-head of global commodities research at Goldman Sachs, said growing shipping disruptions around the Strait of Hormuz have become a major risk for the oil market.

Brent crude was trading near $97 a barrel on Monday after rising to its highest level since July amid the escalating US-Iran tensions and attacks on vessels around the strategic waterway.

Goldman Sachs has set $120 a barrel as its upside scenario if the shipping disruptions continue or become more severe. However, the bank sees oil falling toward $80 a barrel if Middle East exports return to normal levels.

Shipping through the Strait of Hormuz has already dropped sharply. The average number of commodity ships crossing the waterway fell to around 10 a day over the past 10 days, the lowest level since May, according to Kpler data cited by Reuters.

The war has also pushed up prices of natural gas and refined petroleum products, with diesel recording particularly strong gains this year.

Goldman Sachs said investors could use European natural gas and refined oil products as a hedge against further geopolitical supply shocks, as disruptions in those markets could be larger than in crude oil.

Struyven said China could help limit the rise in crude prices by reducing oil imports when prices become too high. However, he does not expect China to provide the same stabilising effect in natural gas and refined petroleum products.