US-Iran Conflict Leaves Oil Markets in Chaos
JP Morgan is struggling to predict the evolution of oil prices due to uncertainty over the war between the US and Iran. The bank's analysts admit that, for the first time since the conflict began, they no longer have a baseline view on how the war will impact oil markets.
In their initial assessment, JP Morgan estimated that several economic thresholds would not be breached, including an oil price above $100 per barrel, inflation at 4%, gasoline above $5 per gallon, and a 5% yield on 10-year US Treasury bonds. However, six months into the conflict, these limits have been exceeded.
Oil is currently trading above $100 per barrel again, while the yield on 10-year US government bonds has surpassed the 5% threshold. JP Morgan estimates that the 'fair value' of oil in September would be approximately $90 per barrel, but warns that market volatility is increasing due to ongoing disruptions to international trade.
The bank cites several factors contributing to this uncertainty, including tensions in the Bab al-Mandab Strait and the influence of the Houthi group. President Donald Trump has even suggested that the war with Iran could continue until after the November midterm elections.