JPMorgan throws in towel on forecasting oil price

The bank no longer knows how to model the market, given the lack of a clear endgame in the US war against Iran US bank JPMorgan has said that it no longer has a clear view on the oil price as the war in the Middle East drags on with no clear end in sight.

The bank’s analysts have abandoned a baseline view of crude oil in what is an unusual step for a major bank and one of the world’s most watched commodities.

“We simply don’t know how to model the endgame,” the bank wrote in a research note, noting that this was the first time it had been unable to generate a view since the US-Israeli war on Iran began.

The on-again, off-again approach to the war demonstrated by US President Donald Trump has left traders at a loss for how to proceed.

A Bloomberg report wrote that JPMorgan is simply making public what traders have long been saying privately: how this ends is impossible to predict.

JPMorgan analysts noted that they had previously assumed that there were lines the Trump administration would not cross, such as oil above $100 per barrel or gasoline at $5 per gallon.

US Treasury yields have also drifted higher, with the 10-year touching 5% this past week.

The Treasury market is watched closely both on Wall Street and in Washington and excessive volatility tends to quickly elicit concern among policymakers given the market’s critical role in the US and global financial system.

However, none of these thresholds appear to have deterred the administration from pressing forward in Iran.

Trump has indicated that he has a “big decision” on Iran coming, warning that he could “annihilate” the Iranian government.

Read more Trump blames fuel price spike on Zelensky Many of JPMorgan’s earlier forecasts proved substantially off the mark.

In early April, it predicted that if disruptions to the Strait of Hormuz persisted into mid-May, oil could hit $150 a barrel.

Oil topped out at around $125 per barrel and has generally stayed near $100 despite frequent disruptions.

Analysts with the bank also predicted that oil inventories in OECD countries would hit “operational minimums” in May, at which point “price increases become exponential rather than linear.” While oil inventories have been depleted globally, they have held up better than many expected, including JPMorgan.