JPMorgan’s reluctance to provide a possible benchmark for oil prices underscores the difficulty of predicting the fallout of a conflict that has no end in sight. The investment bank forecasted in mid-July that Brent crude would average $86 per barrel in the third quarter of 2026. There would be no “long-lasting damage to energy market production,” JPMorgan said at the time.
In the most recent note, JPMorgan said it had three “economic redlines” that it didn’t believe the Trump administration would cross. Among them: $100 for a barrel of crude, gasoline hovering near a national average of $5 per gallon and a 10-year Treasury yield near 5%. The latter signals that investors are demanding higher interest to be swayed into buying Treasury bonds.
‘Those lines have been crossed’
As of Monday afternoon, oil traded at $95 per barrel of Brent crude, the international oil benchmark. It’s a slight drop considering oil prices hovered around $100 for much of the summer due to the scarce supplies reaching energy markets. Gas prices continue climbing upward with the national average standing at $4.48 per gallon, according to AAA. Ten-year Treasury yields are about to breach the 5% threshold for the first time under Trump.
“Six months later, many of those lines have been crossed, yet the exit strategy is less clear, not more,” Kaneva wrote alongside analysts Lyuba Savinova and Artem Fakhretdinov. The trio conceded that there were scarce signs of Iran and the U.S. publicly pursuing a diplomatic off-ramp that would quell pricing unrest in energy markets.
“With no clear signals from either the U.S. or Iran that they are prepared to de-escalate — and absent a diplomatic breakthrough on Sept. 24, when President Trump and President Xi are set to meet in DC — the assumption that the disruption is temporary is becoming increasingly difficult to sustain,” the JPMorgan analysts said.
A ‘more concerning’ price spike in diesel
JPMorgan also flagged another “more concerning” development: Diesel prices reaching record-highs while inventories dry up ahead of usual peak demand periods in winter. Diesel cost $6.51 per gallon on Monday, per AAA, far exceeding its previous $5 record set in June 2022 during Russia’s invasion of Ukraine.
Republican lawmakers are now pushing President Donald Trump to implement a ban on diesel exports in an effort to soften the financial blow to farmers and truck drivers. Sen. Chuck Grassley said that skyrocketing diesel prices “ARE KILLING FARMERS INCOME” in an X post on Saturday. Diesel is a fuel product distinct from gasoline and commonly used in farming equipment and heavy commercial transport.
For now, JPMorgan believes September’s “fair value” for Brent crude will reach $90 with a big caveat. “There is no shortage of risk for the market to price,” the bank analysts said.
Joseph Zeballos-Roig is a policy and politics journalist based in Washington D.C with a focus on economics. He is experienced in connecting the significance of events in the capital to the lives of everyday Americans whether its taxes, tariffs, interest rates or federal programs.
