Full Breakdown
JP Morgan Abandons Baseline Oil-Market Forecast as Iran Conflict Persists
By Drooid · · How we work
Core Development
On September 17, 2026, analysts at JPMorgan Chase announced that the firm no longer holds a clear baseline view for global oil markets—the first such admission since the start of the U.S.–Israeli war on Iran. The statement reflects a shift from an earlier framework that assumed certain economic red lines would force a diplomatic settlement.
Background & Context
When the conflict erupted, JPMorgan’s commodities team built a playbook predicated on three “red lines”: Brent crude above $100 a barrel, U.S. gasoline near $5 a gallon, and 10-year Treasury yields above 5 %. Over the ensuing months, oil prices have repeatedly exceeded $100 a barrel and Treasury yields have breached 5 %, while the anticipated diplomatic breakthrough has not materialized.
Data & Statistics
- Brent price: near $105 a barrel, having touched $110 earlier in the week.
- JPMorgan fair-value estimate (September): roughly $90 a barrel.
- Supply disruption: 10 million barrels per day (bpd) already affected; the market is pricing in an additional ~4 million bpd of potential loss.
- Inventory drawdown: global crude and refined product stocks have fallen by about 555 million barrels since the conflict began.
- Fuel prices: U.S. gasoline averages $4.37 a gallon; diesel has risen to $6.31 a gallon.
- Infrastructure hits: Saudi Arabia’s East-West pipeline (7 million bpd capacity) was shut after a drone attack; Houthi advances threaten Red Sea tanker traffic; the Strait of Hormuz sees daily transits in the low teens versus pre-war levels of 120 plus vessels.
Official Statements & Responses
The bank warned that continued Middle-East supply disruptions could push prices higher later in the year as inventories dwindle. U.S. Energy Secretary Chris Wright described the pipeline outage as a “brief and temporary interruption,” while Rapidan Energy projected a potential 400,000 bpd reduction in Saudi crude exports for the month if the outage extends beyond September. President Donald Trump, in an interview with Axios, said he faces “a big decision” about whether to intensify combat operations against Iran.
Verbatim Quotes
- “For the first time since the start of the Iran conflict, we don't have a baseline view,” — Natasha Kaneva
- “I have a big decision coming up,” — President Trump
Why It Matters
The loss of a baseline forecast signals heightened uncertainty for investors, refiners, and policymakers. With inventories already at record lows, any further supply shock—whether from additional pipeline attacks, escalated Red Sea confrontations, or renewed strikes on Russian refineries—could force markets to rely more heavily on demand-side adjustments, potentially amplifying inflationary pressures. The disparity between Brent’s market price and JPMorgan’s fair-value estimate suggests traders are pricing in a sizable risk premium for further supply losses.
What’s Next
JPMorgan cautions that if current Middle-East flow levels persist through year-end, fourth-quarter Brent prices could run $7-$8 above the firm’s $78-$80 a barrel forecasts. The firm also notes that a diplomatic breakthrough later in September would be required to alter the current pricing dynamics, though no concrete negotiations have been announced.