JP Morgan has abandoned its previous estimate of when the war between Iran and the US might end, as the conflict drags on and the oil market enters a period of heightened uncertainty. The bank withdrew its forecast for the war's conclusion, with strategist Natasha Kaneva stating that JP Morgan no longer has a "baseline view" on the trajectory of the market. This development underscores the difficulty analysts face in identifying the point at which the conflict could end and, by extension, when normal conditions in the energy market might be restored.
The "red lines" that failed to deliver
Initially, JP Morgan had based its assessment on specific economic thresholds, which it believed would exert sufficient pressure on US President Donald Trump to seek a deal by June. Among these were oil prices climbing above $100 per barrel, natural gas prices near $5, and the yield on the 10-year US Treasury rising above 5%. However, these specific levels were breached without yielding a resolution to the conflict. This outcome forced JP Morgan to re-evaluate its previous scenario, as the economic pressures deemed capable of driving a de-escalation have so far failed to produce the expected result.
Brent near $105 – Global reserves decline
Brent crude is now trading near $105 a barrel, while global oil inventories have fallen by approximately 555 million barrels since the outbreak of the conflict. Despite this significant draw on stockpiles, crude prices have not surged as sharply as JP Morgan had initially projected. This development further complicates the picture for the market, as physical supply tightness has not so far translated into a corresponding price spike.
Donald Trump: "Big decision" on the war
At the same time, Donald Trump told Axios on Thursday that he faces a "big decision" regarding whether to resume major military operations against Iran or end the war. The US President noted that he is approaching a critical crossroads regarding the course of the conflict. These statements reinforce uncertainty across financial markets, as the duration and intensity of hostilities have become defining factors for the future path of energy prices.
Warning over a fresh spike in oil prices
Natasha Kaneva warned that if disruptions to Middle Eastern oil supplies persist, crude prices could strengthen further later in the year. As she noted, six months have already passed since the start of the conflict, yet the exit strategy from the war remains unclear. For JP Morgan, the primary issue now is the absence of a clear benchmark for the end of hostilities, making it extremely difficult to predict the next major move in crude markets. The trajectory of prices will largely depend on whether disruptions to Middle Eastern supply remain temporary or evolve into a prolonged issue for the global energy market.
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