JPMorgan Abandons Iran War Outlook as Key Economic Thresholds Surpassed

JPMorgan has abandoned its baseline outlook on the Iran war and informed clients that it can no longer forecast an end point.

Global commodities strategy head Natasha Kneev said key economic thresholds she relied upon have already been surpassed.

JPMorgan had assumed the pain to oil, fuel, and bond markets would lead to a deal reopening the Hormuz Strait under President Donald Trump. The war began on February 28 and has now lasted seven months.

The bank considered multiple thresholds: oil above $100 per barrel, gasoline near $5 per gallon, and 10-year Treasury yields exceeding 5%. All these thresholds have now been breached. U.S. 10-year Treasury yields recently surpassed 5%, hitting a three-year high. Gasoline prices reached an all-time high of $6.31 per gallon amid historically low inventory levels, Kneev stated.

A tentative agreement was expected in June but fighting resumed weeks later and has escalated since then.

JPMorgan views Brent crude's fair value at around $90, compared to the current price of $105. Kneev noted that for every 100,000 barrels per day decline in supply, futures prices could rise by about $4. Current pricing suggests an additional 400,000 barrels per day are lost beyond the initial million.

However, oil inventories may partially offset long-term disruption. Inventories have fallen to 555 million barrels, far below JPMorgan's previous estimate of 1.6 billion barrels.

Meanwhile, consumer burden continues to rise. According to Brown University tracking, U.S. households face an additional $109.1 billion in fuel costs compared to pre-war levels, or $832.48 per household. Gasoline has risen 48.9% and diesel 74.3% since February.