'We simply don't know' - JP Morgan struggling to forecast oil prices due to US-Iran war
Summary
Investment bank JP Morgan says it cannot predict how the US-Iran war will affect oil prices. The usual economic limits assumed at the start of the war have been crossed, but the future outcome remains unclear, making it difficult to model how the conflict will end.Key Facts
- JP Morgan admitted it is struggling to forecast oil prices due to uncertainty around the US-Iran war.
- The bank initially expected "economic red lines" like oil above $100 a barrel or inflation above 4% would lead to a resolution.
- These limits have been crossed, but there is no clear plan for ending the conflict.
- Oil prices have recently risen back above $100 a barrel.
- Inflation and US borrowing costs (interest rates on government bonds) have also increased above earlier thresholds.
- US President Donald Trump expects the war to continue past the November midterm elections, with oil prices falling afterward.
- The conflict has caused supply risks in key shipping routes like the Strait of Hormuz and Bab al-Mandab Strait.
- The ongoing war between Russia and Ukraine adds further pressure on global oil markets.
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