JP Morgan Loses Clarity on Iran Oil Crisis Impact

JP Morgan's analysts are struggling to predict the outcome of the ongoing Iran oil crisis. The bank has lost its clear baseline view for oil markets, marking a significant departure from its usual confident assessments.

The estimated fair value of Brent crude is around $90 per barrel for September, but spot prices are trading near $106. This gap reflects the market's pricing in further supply losses on top of the 10 million barrels per day already disrupted by the conflict.

The bank warns that global oil demand has fallen 4.4 million barrels per day below year-ago levels, and inventories have dropped by about 555 million barrels since the war began. While meaningful inventory buffers remain in China, Europe, Japan, and South Korea, JP Morgan cautions that prices could move higher later this year if disruptions persist.