JPMorgan: Impossible to predict the outcome of the US-Iran conflict as market worries about oil prices

JPMorgan has said that the deep uncertainty surrounding the war between the United States and Iran has made it difficult to predict movements in oil prices.

In a communication to investors, the investment bank said there is currently no central scenario for how the conflict might end. Analysts acknowledged: “we simply do not know how to model the endgame.”

JPMorgan’s commodities markets research team said that, at the beginning of the conflict, it had calculated that President Donald Trump’s administration would face several “economic red lines” that would steer it toward reaching an agreement.

According to the bank’s forecast at the time, an agreement would create the possibility of reopening the maritime corridor through the Strait of Hormuz in June. However, subsequent developments did not match that expectation.

“Six months later, many of these lines have been crossed, yet the exit strategy is less clear, not more so,” JPMorgan analysts wrote.

“For the first time since the conflict with Iran began, we do not have a base case. We simply do not know how to model the endgame.”

Initially, JPMorgan had identified several economic levels that could serve as important limits for the US administration.

“The market is anxious,” the analysts emphasized in their note.

As one of the largest financial institutions in the world, JPMorgan’s position reflects the major difficulties involved in assessing the economic consequences of the conflict.

A representative of the oil and gas industry told the BBC that it was unusual for an investment bank the size of JPMorgan to publish such a direct assessment of the uncertainty surrounding forecasts.

The price of oil plays an important role in global inflation, as fuels and energy products directly or indirectly affect transportation, manufacturing, and the cost of goods and services.

US President Donald Trump has said he does not expect the confrontation with Iran to end before the US midterm elections, which will be held in November.

“Immediately after the election, oil prices will fall significantly,” Trump told reporters last week. He added that the war could continue beyond the midterm elections.

The statement came at a time when high energy prices were increasing pressure on the cost of living in the United States and other economies.