Ben Aris in Moscow -

Rising tensions between Israel and Iran over Tehran's nuclear development programme could drive oil prices over $130 a barrel next year, Goldman Sachs' chief economist in Moscow warned at a time when the consensus forecast is for a price decline to $80-90 because of slowing global growth and the euro crisis.

"Goldman Sachs is bullish on oil, but it will driven by a one-off, not rising demand, by a tightening embargo on Iran that will take more and more oil out of the market," says Clemens Grafe, Goldman Sachs' managing director of new market economics in an interview with bne.

Separately, Robert McNally, the former chief energy advisor on US President George W. Bush's National Security Council and past advisor to Republican presidential candidate Mitt Romney, sees a "dangerous divergence" between market players and policymakers with regard to the risks of a conflict between Israel and Iran. McNally says the markets appear to assign only a 5% probability to an escalation in the conflict whereas policymakers "are more like 50-50 right now."

Commodity traders' complacency is due to the fact that Tehran has walked over so many previous lines drawn in the sand by Israel and the US with impunity, says McNally. "I've made my living looking for these divergences between market participants and policymakers," McNally said in an interview with Renaissance Insights, a publication of Renaissance Capital, the Moscow-based investment bank. "I cannot remember a time in my 20-year career when the gap between Planet Market and Planet Officialdom was so wide."

Iran's nuclear programme is rapidly approaching a crunch point after which it will disappear into hardened underground bunkers that would be impervious to Israeli missiles, argues McNally. "At some point over the coming months, Israel either must strike or depend on the US to live up to its own pledge not to allow Iran to weaponise its nuclear programme," says McNally.

Clemens and McNally are talking about two very different scenarios: one a slow-moving internationally-coordinated embargo and the other the outbreak of war. However, both are assuming tensions between Israel and Iran will increase over the coming months and drive prices of oil up.

Clemens concedes there is still plenty the West can do to prevent a spike in oil prices. "This doesn't mean the oil price will be $130 even if the problems escalate. There could be an offset if strategic reserves are released in the west or if there is progress in talks and the embargo is not tightened," says Clemens. "If oil remains over $120 then global growth will slow and this price can't be maintained."

Oil producers wouldn't welcome yet more volatility in the market. Typically oil prices spike at the outbreak of hostilities, before falling back if US forces get involved. Higher oil prices would benefit emerging markets like Russia, Venezuela and Nigeria in the short term, but if they stay high for any length of time, this will exacerbate the global economic recession that will eventually hit oil demand and the capital flows on which emerging markets still depend.

Despite Brent crude standing at around $110 a barrel the deepening recession in Europe has already seen Russia's economy slow sharply, growing by only 2.8% in annualised terms in August, against a relatively robust 4.4% over the first half of this year.