JP Morgan Uncertain About Oil Market Endgame Amid Ongoing US-Iran Conflict

JP Morgan analysts have expressed uncertainty about the oil market's endgame as the conflict between the US and Iran continues. The bank, which has been tracking the situation closely, stated that it does not have a clear baseline view for oil markets since the start of the war.

In a note released on September 17, JP Morgan noted that at the beginning of the conflict, they assumed there were certain economic thresholds that the US administration would not cross. However, six months into the conflict, many of those lines have been crossed with no clear exit strategy in sight.

The bank pointed out that oil prices have climbed above $100 a barrel, with gasoline reaching $4.37 a gallon and diesel hitting an all-time high of $6.31 a gallon heading into winter. Inventories are at all-time lows, exacerbating the situation.

JP Morgan estimated Brent's fair value at around $90 a barrel for September, which is lower than the current price near $106. This suggests that markets are pricing in the risk of further supply losses beyond the estimated 10 million barrels per day already disrupted.