JPMorgan says Iran war has made oil nearly impossible to forecast

More than six months after the start of the U.S.-Israel military operation against Iran, JPMorgan Chase's ↗ 0.10% oil analysts have conceded that the conflict's trajectory has become nearly impossible to forecast — a view long held by traders but now formally acknowledged by one of Wall Street's most-watched commodities desks.

Red Lines Already Crossed

In a note published Thursday, analysts including Natasha Kaneva said several economic red lines the bank had assumed the U.S. administration would be unwilling to cross have already been breached: oil rising above $100 a barrel, gasoline prices approaching $5 a gallon, and surging Treasury yields. Those thresholds were once seen as guardrails that would push Washington toward de-escalation, but with all three now in the rearview mirror, the exit strategy has grown murkier.bloomberg

The conflict has already reshaped global energy markets. The International Energy Agency's September report noted that Brent crude surged to $105 per barrel, up 45% from pre-war levels, while diesel prices in the United States topped $200 per barrel — nearly double what they were before hostilities began. World oil supply is now projected at 100.7 million barrels per day in 2026, down 5.7 million year-over-year, with a full recovery deferred until 2027. A drone attack last week on Saudi Arabia's East-West pipeline, blamed on Iran-backed fighters in Iraq, knocked out the kingdom's only route around the blockaded Strait of Hormuz, threatening an additional 4% of global supply.worldtribune+1

Ripple Effects on Central Banks

The war's inflationary consequences are now reverberating through monetary policy worldwide. Hours before the JPMorgan oil note landed, the Bank of England held its benchmark rate at 3.75% in a 6-3 vote but warned that inflation could top 4% early next year, with Governor Andrew Bailey cautioning that prolonged Middle East conflict may require tighter policy. JPMorgan economist Allan Monks said the BoE "almost sounds as if they have already made up their minds" on a November rate hike and now expects a second increase in February, followed by a pause — a more hawkish path than his previous forecast, which had included two rate cuts in 2027.reuters+2

No Clear End in Sight

President Trump said last week he expects the war to end "very soon" after November's midterm elections and predicted oil prices would then "drop like a rock". But JPMorgan's analysts are not building their models around that timeline. The bank's July forecast had Brent averaging $86 in the third quarter and declining to $78 by year-end — figures already overtaken by events on the ground, underscoring just how fast the war has outrun Wall Street's assumptions.jpmorgan+2