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JP Morgan Can't Model Oil's 'Endgame' Amid US-Iran War

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JP Morgan told investors it 'simply doesn't know how to model the endgame' for oil prices as the US-Iran war pushes crude back above $100 a barrel.

JP Morgan has told investors it can no longer forecast where oil prices are heading, admitting in a note published on 18 September 2026 that its analysts "simply don't know how to model the endgame" of the war between the United States and Iran. The message from one of the world's largest investment banks underlined how difficult markets are finding it to price the conflict and its economic fallout.

At the start of the war, the bank assumed there would be "economic red lines" that President Donald Trump's administration would refuse to cross. On that basis, its analysts expected a deal to reopen the Strait of Hormuz shipping lane to have been reached back in June. Those red lines included oil rising above $100 a barrel, inflation hitting 4%, gasoline topping $5 a gallon, and the yield on 10-year US government bonds reaching 5%.

Six months into the conflict, several of those thresholds have been breached. Oil has surged back above $100 a barrel in recent weeks, and the yield on government bonds - the interest rate the US pays to borrow from financial markets - has ticked over 5%. Gasoline remains below $5 a gallon and inflation has not yet reached 4%.

"Six months later, many of those lines have been crossed, yet the exit strategy is less clear, not more," the bank's commodities research team wrote. "For the first time since the start of the Iran conflict, we don't have a baseline view. We simply don't know how to model the endgame." The analysts also said the market was "on edge."

The candour is notable for a firm of JP Morgan's size. An oil and gas industry source described the decision to publish such a note as "unusual" for a high-profile investment firm, but called it a "reflection on the state of play" given the uncertainties surrounding the war. Oil prices feed directly into inflation expectations, which investors rely on when making decisions, because the commodity is used so widely across the global economy.

Trump ties oil to the midterms

Trump said last week that he did not expect the war to end until after November's US midterm elections. "Right after the election, oil prices are going to be tumbling downward," he told reporters. "I think it's going to take a little bit longer than the midterm."

High crude prices have driven up the cost of living in the US and elsewhere, with fuel and energy costs climbing ahead of the colder months. That backdrop shaped a decision this week by the Federal Reserve, which raised interest rates for the first time in more than three years and signalled further increases could follow this year and into 2027 as it tries to slow rising prices.

Fed Chair Kevin Warsh said the central bank acted because "inflation is too high and has been for too long." Trump disagreed with the move.

A gap between price and 'fair value'

Despite crude trading above $100, JP Morgan estimated the "fair value" for oil in September at around $90 a barrel. The bank said the higher market price reflected traders bracing for further disruption, noting that "the market is pricing in the risk" of more trouble ahead.

Analysts pointed to additional threats to oil supply in the Middle East, including from Yemen's Houthis, who are backed by Iran. With the Strait of Hormuz still not reopened and no clear resolution in sight, the bank's inability to set a baseline view captures how much of the outlook now hinges on political decisions rather than market fundamentals.

JP Morgan oil forecast, US-Iran war oil prices, oil above $100 a barrel, Strait of Hormuz, Donald Trump oil, Federal Reserve interest rates, Kevin Warsh inflation, oil price uncertainty

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