Iran War Sparks Oil Price Chaos: JPMorgan Abandons Forecast

JPMorgan Chase has given up on its efforts to forecast crude oil prices due to the ongoing Iran war. The bank, which is the largest US commercial bank, stated that it no longer has a baseline view of the situation.

According to JPMorgan, at the start of the conflict, they assumed that several economic redlines would force President Donald Trump into an agreement to reopen the Strait of Hormuz waterway. These redlines included crude oil prices above $100 USD, retail gas prices near $5 USD per gallon, and 10-year Treasury yields above 5%.

However, six months later, many of these lines have been crossed, yet the exit strategy is less clear than before. Crude oil prices are now above $100 USD, gas prices are above $5 USD a gallon in many US cities, and the 10-year Treasury yield has risen above 5%.

JPMorgan estimates that the fair price for Brent crude oil is about $90 USD per barrel, but it is currently trading near $105 USD a barrel. The bank notes that there are no signs from the US or Iran that they're ready to de-escalate the fighting and reopen the Strait of Hormuz.