J.P. Morgan analysts say that for the first time since the US-Iran conflict began, they have no baseline scenario for how it ends. Brent trades well above the bank's own fair-value estimate, while gasoline and diesel sit at record levels heading into winter.
JPMorgan drops its price roadmap
J.P. Morgan's commodities strategists, led by Natasha Kaneva, conceded in a report sent to Rigzone that they can no longer model how the conflict resolves. According to Rigzone: "We simply don't know how to model the endgame", the analysts said.
The bank had expected the crisis to end once it crossed economic red lines the US would not tolerate — including $100 oil and gasoline near $5 a gallon. Six months later, those lines have been crossed without an exit: gasoline sits at $4.37 a gallon and diesel at an all-time high of $6.31 a gallon heading into peak winter demand. The analysts estimate September fair value at $90 a barrel, yet Brent is trading at $106, a premium they say prices in roughly four million barrels a day of additional supply losses on top of the ten million already disrupted.
Inventories drew far less than expected
The market has cleared the disruption mostly through weaker demand rather than the inventory drawdown JPMorgan had modeled. Since the conflict began, crude and product draws totaled 555 million barrels, about a third of the 1.6 billion barrels the bank had expected.
Of that total, the US released 219 million barrels, China 147 million, Europe 77 million and Japan 69 million, while South Korea added 12 million barrels to its own stocks. Demand, meanwhile, is running 4.4 million barrels a day below last year's level since March, and Brent has averaged just $94 over the same period.
Remaining US commercial stocks sit near the bottom of their range, and the Strategic Petroleum Reserve can provide only another 30 million barrels. JPMorgan sees China as the largest swing factor, capable of releasing another 120 million barrels by year-end at its current draw pace.
Risks widen across the Gulf and Russia
The bank flagged fresh pressure points beyond the Strait of Hormuz. Houthi advances along Yemen's Red Sea coast and an attack on Saudi Arabia's East-West pipeline have opened new threats to crude exports. Ukrainian drones also struck Russia's Slavyansk, Taneco and Syzran refineries over three consecutive days in September.
With no diplomatic breakthrough expected before President Trump and President Xi meet in Washington on September 24, JPMorgan warns that if Middle East flows hold at current levels, its framework implies 4Q26 and December 2026 prices roughly $7 and $8 above current forecasts, respectively.
Source: Rigzone
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