JPMorgan Abandons Oil Price Forecast Amid Escalating Iran War

JPMorgan has effectively abandoned its base-case outlook for oil prices due to the escalating Iran war and its unpredictable outcome. The bank's head of global commodities strategy, Natasha Kaneva, said they 'honestly don't know anymore' how to model the endgame. The conflict has become more complex with the Strait of Hormuz still far from normalized, Saudi Arabia's bypass pipeline shut, and disruptions to the Red Sea detour deepening.

The main risk is oil, which has not yet surged into the worst-case scenario of over $120 a barrel due to inventories and weaker demand. However, JPMorgan warns that supply disruptions could worsen if Middle Eastern oil flows remain stuck at current levels, forcing the bank to raise its forecast.

The next turning point is the Sept. 24 summit in Washington between Trump and Chinese President Xi Jinping, where a diplomatic breakthrough involving China may be the last hope for stabilizing oil prices. If the meeting fails to produce an agreement, it will become increasingly difficult to maintain the assumption that oil supply disruptions are temporary.