JPMorgan Abandons Oil Price Forecast Amid Ongoing Iran Conflict

The ongoing conflict in Iran has caused significant volatility in oil markets, making it difficult for Wall Street firms to forecast future crude costs. JPMorgan's commodities team has abandoned its 'baseline view' on oil prices, citing the uncertainty surrounding the endgame of the conflict.

The conflict has throttled about a quarter of the world's oil that is shipped through the Strait of Hormuz, and Saudi Arabia has cut oil shipments to Europe after drone attacks damaged its key export pipeline. The White House's messaging on the conflict has also been inconsistent, with President Trump repeatedly announcing progress towards ending the hostilities only to reverse course.

JPMorgan strategists have stated that they can no longer reliably model where crude prices go from here, and that the endgame of the conflict is 'hard to model given the ongoing volatility and a wide range of potential outcomes.' The firm continues to publish estimates, but acknowledges the difficulty in forecasting oil prices.

The pricing of Brent crude has been highly volatile, trading at around $72 when war started in February, surging to roughly $126 in April, falling towards $73 in June, and climbing back to around $100 a barrel. JPMorgan believes that the price shock from the lack of supply was offset somewhat by consumers cutting back on the use of petroleum products like gasoline.