The bank no longer knows how to model the market, given the lack of a clear endgame in the US war against Iran
US bank JPMorgan has said that it no longer has a clear view on the oil price as the war in the Middle East drags on with no clear end in sight. The bank’s analysts have abandoned a baseline view of crude oil in what is an unusual step for a major bank and one of the world’s most watched commodities.
“We simply don’t know how to model the endgame,” the bank wrote in a research note, noting that this was the first time it had been unable to generate a view since the US-Israeli war on Iran began.
The on-again, off-again approach to the war demonstrated by US President Donald Trump has left traders at a loss for how to proceed. A Bloomberg report wrote that JPMorgan is simply making public what traders have long been saying privately: how this ends is impossible to predict.
JPMorgan analysts noted that they had previously assumed that there were lines the Trump administration would not cross, such as oil above $100 per barrel or gasoline at $5 per gallon. US Treasury yields have also drifted higher, with the 10-year touching 5% this past week. The Treasury market is watched closely both on Wall Street and in Washington and excessive volatility tends to quickly elicit concern among policymakers given the market’s critical role in the US and global financial system.
However, none of these thresholds appear to have deterred the administration from pressing forward in Iran. Trump has indicated that he has a “big decision” on Iran coming, warning that he could “annihilate” the Iranian government.
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Many of JPMorgan’s earlier forecasts proved substantially off the mark. In early April, it predicted that if disruptions to the Strait of Hormuz persisted into mid-May, oil could hit $150 a barrel. Oil topped out at around $125 per barrel and has generally stayed near $100 despite frequent disruptions.
Analysts with the bank also predicted that oil inventories in OECD countries would hit “operational minimums” in May, at which point “price increases become exponential rather than linear.” While oil inventories have been depleted globally, they have held up better than many expected, including JPMorgan.
What has happened is that demand destruction more than inventory draws has helped absorb the supply disruption and avoid higher crude prices, JPMorgan analysts admitted.
The International Energy Agency now expects world oil demand to decline by a sizable 2.5 million barrels per day in 2026, a drop that is 940,000 barrels per day greater than the estimate in the August report. The extent of the lost demand also speaks to a weaker underlying economy as consumers and businesses shy away from paying up to maintain previous consumption levels.
This is the JPM oil report everyone’s talking about. pic.twitter.com/JBdM28FkjZ— HFI Research (@HFI_Research) September 18, 2026
Meanwhile, the effect has not been evenly distributed. According to petroleum geologist Art Berman, the crisis hits vulnerable import-dependent developing countries first, where high oil prices together with currency weakness – in some cases a vicious feedback loop – make the burden substantially more difficult to bear.
“The first participants forced out of the market are not wealthy American consumers,” he wrote. “They are fertilizer buyers in Africa, trucking firms in Pakistan, factories in Bangladesh, and households across import-dependent economies.”
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Oil tops $100 as Middle East conflict intensifies
Demand destruction is a common phenomenon during energy crises. During the 1979 oil crisis tied to the Iranian Revolution, the surge in price led to a nearly 20% decline in US consumption over a four-year period.
In early 2008, crude oil staged a parabolic run from about $90 a barrel in January to an all-time record high of $147 in July. The extreme price movement triggered rapid demand destruction that damaged consumer spending and is seen by many analysts as one of the underappreciated causes of the ensuing crisis that would rock the global economy.
Europe’s energy crisis in 2022 driven by its rejection of cheap Russian gas ended up in consumption dropping 20% from pre-2022 levels as of late 2025. Even when prices eventually came down from record highs, the damage had been done: factories had shuttered and some businesses relocated energy-intense processes overseas.
Oil prices dropped toward the end of this week amid hopes for a recovery of flows through Saudi Arabia’s critical East-West pipeline, which was damaged in a drone attack. Nevertheless, Brent held above $100 per barrel, trading at around $103 mid-afternoon London time on Friday.
