JPMorgan Forecasts Further Oil Price Increases Amid Iran War Supply Shock

The Iran war has cut Persian Gulf output, pushing global oil supply disruptions from 9.1 million barrels per day (bpd) in March to 13.7 million bpd in April. Spare capacity from Saudi Arabia and the United Arab Emirates remains unavailable, eliminating the market’s primary relief valve. Inventories fell by 4 million bpd in March and a further 7.1 million bpd in April, while demand slipped 2.8 million bpd in March and 4.3 million bpd by late April—almost twice the decline seen during the global financial crisis. Brent traded near $105.40 per barrel and WTI in the mid-$90s, yet the price drop has not curbed consumption in regions with limited buffers, which account for roughly 87 % of the April demand loss.

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JPMorgan analysts, led by Natasha Kaneva, argue that current Brent and WTI levels are insufficient to offset the scale of the demand loss. The bank cites shortages that suppress consumption, especially where inventory buffers are thin, and notes that even after an 8 million bpd inventory draw the market remains short by about 2 million bpd. Higher prices, they say, may be required, potentially shifting more of the adjustment onto Europe and United States.

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• “JPMorgan says oil prices still have further to rise because the market has not yet forced enough demand out of the system to offset the supply loss from the Iran war.” — Natasha Kaneva, JPMorgan

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• “The first relief valve, spare capacity, has not worked because supply from Saudi Arabia and the United Arab Emirates remains cut off.” — Natasha Kaneva, JPMorgan

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• “The bank’s conclusion is that physical shortages are suppressing consumption, especially in markets with little buffer.” — Natasha Kaneva, JPMorgan

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• “Kaneva argues higher prices may be needed to force enough demand off the market.” — Natasha Kaneva, JPMorgan

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• “com as a preferred source in Google here JPMorgan says even after heavy inventory drawdowns of 8 million barrels per day, the market is still missing about 2 million barrels per day.” — Natasha Kaneva, JPMorgan

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Rising prices could depress U.S. gasoline demand, where pump prices averaged $4.048 per gallon on April 23, and reduce air-travel demand as airfares climb. Europe and the United States may become the primary absorbers of the shortfall, reshaping trade flows and refining margins.

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Goldman Sachs estimates Persian Gulf output is down 57 %—about 14.5 million bpd—from pre-war levels, a larger shortfall than JPMorgan’s implied supply loss. The divergence underscores uncertainty over the exact magnitude of the supply gap.

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JPMorgan expects continued inventory depletion and supply constraints to push oil prices higher. Market participants will monitor OPEC+ policy moves, diplomatic shifts in the Iran conflict, and emerging demand trends in vulnerable regions to gauge future price trajectories.

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