Oil Price Predictions Amid Ongoing Conflict

The ongoing conflict with Iran has entered its seventh month, and now, even oil price analysts are feeling uncertain about their forecasts. Recently, J.P. Morgan decided to stop trying to predict the situation, stating that they are unsure how to assess the war’s end and its effect on surging gas prices.

This surprising statement was made by Natasha Kaneva, who leads global commodities research at J.P. Morgan. She mentioned in a client note, which was reported by a news source, that “for the first time since the onset of the Iran conflict, there isn’t a baseline view” of the oil market.

Kaneva added that “we simply don’t know how to model the endgame.”

Concerns about the ongoing conflict have intensified, particularly regarding the situation in the Strait of Hormuz. Despite President Trump’s claims that the U.S. has firm control over the strait, Iran argues that it remains inaccessible until Trump and Israeli Prime Minister Netanyahu are ousted from power.

According to news accounts, while some vessels are still allowed to pass through, the daily traffic has plummeted from about 125 ships per day to just four or ten in the last week. This decrease in oil tanker movement has led to dwindling oil supplies and rising prices.

Until now, analysts had held out hope that three approaching economic thresholds would pressure Trump into negotiating a reopening of the Strait by June. These thresholds included:

• Oil prices surpassing $100 per barrel;
• The 10-year Treasury yield hitting 5%; and
• The national average gasoline price reaching $5.

The first two thresholds have already been crossed, with gas prices inching up to around $4.47 according to estimates. As we move through September, any resolution still seems distant, and analysts are largely giving up on trying to forecast what will happen next.

Adding to the situation, a Saudi pipeline was recently attacked by an Iraqi drone, further disrupting oil supplies and inflating gas prices. Nevertheless, the Trump administration maintains that they’re handling the situation effectively.

“This will be a brief and temporary interruption,” said Energy Secretary Chris Wright after the drone event, asserting it would only last for a matter of days.

Reports indicate that a full restoration could take weeks, leaving many unsure of the actual timeline. Currently, gas prices continue to soar, especially on the West Coast, where prices have already surpassed $5 per gallon, while California appears to be approaching $6 per gallon. Plus, the looming midterm elections add another layer of concern.

Wright assured in a separate statement that “diesel prices, gasoline prices, all of them will be coming back down.”