JP Morgan oil trading team’s Jake Pashelinsky says the probability of a US‑Iran
agreement has fallen to its lowest level since the war began (Sept. 7 report).
Two primary scenarios: (1) the Strait of Hormuz becomes a prolonged conflict
zone, possibly extending beyond the U.S. midterms, with Iran reducing transits
to undermine a U.S. blockade; (2) the U.S. withdraws, leaving Gulf states to
decide on transit fees — a result that would give Iran leverage over strait
flows, oil prices and generate large revenues. JP Morgan judges the U.S. is most
likely to maintain the status quo while oil prices remain contained; only
further upside in oil would likely force a strategic shift. Continued U.S.
economic pressure on Iran is viewed as more likely to provoke escalation than
détente. Over the long run, higher oil prices could, via demand destruction and
lower global reliance on regional supply, eventually ease the challenge.
