The Chinese national flag is seen in the financial district of Pudong in Shanghai
A Goldman Sachs analyst said Chinese energy demand will fundamentally drive the upside in oil prices during 2012. Reuters

China's growing energy demand means oil should fundamentally have more upside than other publicly traded commodities, a Goldman Sachs analyst told a financial strategy conference in London Monday. Subtantial risks of geopolitical shock also signal a bullish trend for crude, said Jeff Currie, head of Commodities Research for Goldman Sachs.

Into 2012, you argue that the risks change. There's more upside risk to demand and upside risk to supply, said Currie, according to the Dow Jones Newswires.

Goldman expects Brent oil, a benchmark crude used to gauge the price of oil for European delivery, to finish the year at $127.50 per barrel, trading at an average of $120 throughout the year. Currently, Brent crude is hovering around $113 per barrel.

Currie also anticipates the crude oil market to display continuing steep backwardation, a phenomenom in which the price of commodity futures sharply increase as the date for delivery approaches.

Goldman's predictions on the price and supply of crude are not the most bullish to have been floated recently, and stand out for giving weight to Chinese demand. Most analysts have been focusing on geopolitical developments affecting Iran as the main reason behind crude price fluctuations.

Monday, Societe Generale research analysts in New York said military action that disrupts the supply channels around the Strait of Hormuz would cause Brent to spike to $200 a barrel. Late last year, PIMCO, the investment firm best known for operating the world's largest mutual fund, put out a collection of oil price scenarios the firm foresaw in case of a military attack on Iran. The predictions ranged from $140 if an attack ended up being only mildly disruptive to an Armaggedon scenario involving worldwide oil disruptions.