Brent Crude May Average Only $87 Per Barrel Even in Prolonged Conflict

JPMorgan has released a report that challenges the conventional wisdom on oil prices. Despite the ongoing US-Iran conflict, which has led to a significant increase in Brent crude futures, JPMorgan estimates that even if the conflict persists into 2027, Brent crude may average only around $87 per barrel.

This assessment stands in contrast to the current market sentiment, where oil prices have surged due to concerns about supply disruptions. However, JPMorgan's analysis suggests that high oil prices themselves are driving self-correction across the global petroleum system. The bank estimates that since the Strait of Hormuz closure, global oil demand has averaged roughly 5 million barrels per day below year-earlier levels.

JPMorgan projects that if the strait remains effectively closed long-term, global demand in 2027 could fall to approximately 101.6 million barrels per day, about 4 million barrels per day below 2025 levels, equivalent to global oil consumption reverting to levels last seen around 2019.

The report also highlights that non-Middle East producers are accelerating output, with supply growth increasing by roughly 2 million barrels per day in the first half of 2026. JPMorgan projects North American liquids supply to rise from approximately 29.7 million barrels per day in 2025 to 31 million barrels per day in 2027.