J.P. Morgan announced that for the first time since the start of the U.S. and Israeli regime's war against Iran, a clear outlook on the future of oil markets cannot be provided. Analysts at this American bank pointed to the complexities in the oil market and the inability to predict its future in a report.
Increase in Oil and Gasoline Prices
J.P. Morgan had predicted that there was a specific economic threshold that the U.S. government would not cross; however, after six months of conflict, many of these red lines have been broken. Currently, the price of Brent crude oil has reached over $106 per barrel, and the price of gasoline in the U.S. has increased to $4.37 per gallon. Additionally, the price of diesel has reached $6.31 per gallon at the peak of winter demand, while the country's storage levels are at their lowest.
Decrease in Storage and Demand
J.P. Morgan also pointed to the decrease in crude oil and petroleum product storage globally, which has dropped by about 555 million barrels since the start of the war. This decrease is only one-third of the amount predicted earlier this year. Meanwhile, global oil demand has been about 4.4 million barrels per day lower than the same period last year, which has helped to offset the supply shortage.
The bank also highlighted the increasing risks across the Middle East, including disruptions in the Bab el-Mandeb Strait and attacks on Saudi Arabia's oil export facilities. Despite this, oil prices have risen less than expected because governments and consumers have drawn less from existing storage. As a result, the market has been able to absorb the significant shock from supply disruptions without a sustained increase in crude oil prices.
The International Energy Agency has also predicted that global oil supply and demand will decline more than previous forecasts this year. Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) expects global oil demand to increase this year, although it has reduced its forecast for the fifth consecutive month.
J.P. Morgan stated that existing global storage could act as a buffer against long-term supply disruptions and limit the need for a significant increase in crude oil prices in the short term. However, if supply disruptions from Middle Eastern producers continue, there is a possibility of an increase in oil prices later this year.
