Oil Markets Uncertainty Persists Amid Ongoing Conflict

JP Morgan analysts have expressed uncertainty about the future of oil markets due to ongoing conflicts in the Middle East. For the first time since the US-Israeli war on Iran began, the bank is struggling to predict a clear endgame for oil prices.

The conflict has disrupted an estimated 10 million barrels per day of supply, with Brent crude prices currently trading near $106 per barrel. JP Morgan estimates that Brent's fair value is around $90 per barrel for September.

Despite the scale of supply disruptions, oil prices have not risen as sharply as expected because governments and consumers have relied less on inventory drawdowns. Global inventories of crude and refined products have fallen by about 555 million barrels since the conflict began, which is only around one-third of the decline the bank had projected earlier this year.

The International Energy Agency has also forecast that global oil supply and demand will fall further than previously expected this year. However, producer group OPEC still expects world oil demand to grow this year, even though it lowered its forecast for a fifth straight month.