JPMorgan analysts, including Natasha Kaneva, say calling the end of the Iran war has become increasingly uncertain. In a note that market participants broadly referenced on Thursday, they wrote, "The market is on edge, in our view." They note that many oil traders and other analysts see the surge in energy costs rippling through the economy, endangering global growth and fanning inflation.
They further argue those policy guardrails have already been crossed - crude topping $100 a barrel, gasoline nearing $5 a gallon, and Treasury yields jumping. With those lines now in the rearview, a clean exit strategy is harder to see.
JPMorgan estimates oil's fair value in September at roughly $90 a barrel, even as prices are close to $106. According to their math, the gap implies the market is factoring in the risk that 4 million more barrels a day could be removed from supply, on top of roughly 10 million barrels a day already offline.
Recent attacks on critical energy infrastructure, including Saudi Arabia's East-West pipeline, are sharpening worries about tighter supply. Although worldwide stockpiles have been drawn down during the war, for the time being there remains sufficient slack to cap further crude increases.
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The note says neither the US nor Iran is signaling a willingness to de-escalate. If no diplomatic breakthrough emerges on Sept. 24, when President Trump and President Xi plan to meet in DC, it is becoming harder to claim the disruption will be brief.
If Middle Eastern flows stay where they are, JPMorgan estimates fourth quarter prices could run about $7 above its current forecast of around $80 a barrel, and December 2026 could be roughly $8 higher than its current projection of about $78.
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