JPMorgan Gives Up Forecasting Iran War Endgame as Trump Tells Reporters ‘Anything Could Happen With Me’

JPMorgan's (JPM) commodities team has formally abandoned its baseline forecast for oil markets, marking an unprecedented admission from one of Wall Street's most influential energy desks that the Iran conflict, now in its seventh month, has become impossible to model. 

“For the first time since the start of the Iran conflict, we don’t have a baseline view,” wrote Natasha Kaneva, head of global commodities strategy, on Thursday. “We simply don’t know how to model the endgame.”

Every Red Line Has Been Crossed, Says JPMorgan

Kaneva added that the economic thresholds the firm once assumed would force the Trump administration to negotiate a resolution to the Strait of Hormuz closure have all been breached without producing a diplomatic offramp. Oil (CLV26) above $100 per barrel, gasoline (RBV26) near $5 per gallon, diesel at a record $6.31 per gallon, and the 10-year Treasury yield ($TNX) surpassing 5% were all viewed as political pain points that would compel de-escalation, yet the conflict has only intensified.

Brent crude (CBX26) is currently trading near $106 per barrel against JPMorgan's estimated fair value of roughly $90, a gap that implies the market is pricing in the risk of an additional 4 million barrels per day of supply losses on top of the approximately 10 million barrels per day already disrupted. 

The situation has been compounded by a drone strike that knocked Saudi Arabia's critical East-West pipeline offline and by Houthi advances along the Red Sea coast that threaten tanker traffic through the Bab el-Mandeb Strait. These developments have systematically dismantled the alternative export routes that had partially compensated for the effective closure of the Strait of Hormuz.

Why the Energy Shock Hasn't Been Worse

Despite the historic scale of the supply disruption, oil prices have not surged as catastrophically as initially feared, largely because global demand has collapsed by roughly 4.4 million barrels per day compared to the prior year. Global crude and refined product inventories have fallen by approximately 555 million barrels, only one-third of JPMorgan's original projection of a 1.6 billion barrel drawdown. 

The market has effectively absorbed the shock through demand destruction rather than inventory depletion, keeping Brent's average since the conflict began at approximately $94 per barrel. However, the bank cautioned that remaining inventory buffers, while still meaningful in China, Europe, Japan, and South Korea, are finite.

Forecasting the Next Move is Impossible

President Trump has added to market confusion with contradictory signals, telling reporters that the war is hopefully nearing its end while simultaneously telling Axios he is weighing whether to resume large-scale military operations against Iran. His remark that "anything could happen with me" encapsulates the policy unpredictability that has made forecasting untenable. 

The so-called "TACO" trade — Wall Street shorthand for "Trump Always Chickens Out" — which successfully predicted a brief de-escalation in July, is now being questioned as equity markets have remained more resilient than expected, potentially reducing the president's incentive to pursue peace.

Ripple Effects Across the Economy

The broader economic fallout is accelerating rapidly, with the Federal Reserve raising interest rates for the first time in three years to combat war-driven inflation, the Bank of England warning that hikes may follow, and the Bank of Japan tightening to its highest rate in 31 years. 

The extra fuel burden on American households has reached an estimated $109.1 billion, or roughly $832 per household, creating a significant political liability heading into midterm elections now less than 50 days away. 

The Next Catalyst to Watch

JPMorgan has flagged the September 24 Trump-Xi summit in Washington as the last near-term inflection point before markets begin treating the supply disruption as structural rather than temporary, a shift that could push fourth-quarter prices significantly higher and deepen the global economic damage already underway.

For a closer look at which stocks are feeling the pain from soaring fuel prices, here’s a clip from our “Market on Close” livestream with Senior Market Strategist John Rowland, CMT.

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On the date of publication, Sarah Holzmann did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.