Crude Oil Could Spike to $120—JP Morgan Warns Amid Middle-East Tensions

J.P. Morgan has warned that crude oil prices could surge to $120–130 per barrel if the ongoing Israel–Iran conflict escalates, particularly through disruption of oil flow via the Strait of Hormuz. The bank estimates a 7% probability of this worst-case geopolitical scenario unfolding

⚠️ Why $120 Is Plausible

• Escalation risk: Full-scale confrontation could involve Iran targeting oil infrastructure or closing the Strait of Hormuz, with ~20–30% of seaborne oil transit passing through it
• Exponential moves: J.P. Morgan warns that such a crisis would cause panic-driven price spikes, not gradual increases
• Inflation danger: At $120 oil, J.P. Morgan says U.S. CPI inflation could reach 5%, complicating Fed policy

📊 Base Case vs. Upside Risk

• Base forecast: Despite concerns, J.P. Morgan projects:
  • Low-to-mid $60s for Brent crude in 2025
  • About $60 in 2026 ainvest.com+10fastbull.com+10x.com+10ainvest.com+9jpmorgan.com+9forexlive.com+9.
• Risk premium: Current prices (~$74/barrel) include a $4 premium, reflecting existing geopolitical tension reuters.com+3reuters.com+3forexlive.com+3.

🌍 Broader Market Implications

• Oil benchmarks: Brent and WTI both spiked ~8–9% intraday to ~$74–75 due to the conflict .
• Global markets: Higher inflation from energy prices could stall central bank rate cuts and hurt equity markets .
• Strategic dynamics: Goldman Sachs, Citi, and OPEC—while downplaying full supply shocks—agree geopolitical risk remains elevated .

🔮 What’s Next?

• Monitor conflict escalation: Actions like a Strait of Hormuz blockade could determine whether prices spike above $100–120.
• Fed outlook: A high inflation scenario may delay expected interest rate cuts.
• Energy strategy: Longer-term pricing depends on OPEC+ responses, U.S. shale output, and geopolitical de-escalation

✅ Summary

J.P. Morgan’s warning underlines how an Iran–Israel flare-up could threaten crude supplies and push prices toward $120–130, especially if critical shipping lanes are threatened. But if the conflict remains contained, prices may settle back into the $60–70 range.