Crude oil prices could spike to $120, warns J.P. Morgan. Explained in 6 key points
Global oil markets were jolted on Friday after Israel launched a sweeping military operation on Iranian nuclear and military sites, with J.P. Morgan warning that oil prices could surge to as high as $120 per barrel if geopolitical tensions in the Middle East worsen further.
The investment bank said current prices already reflect a 7% chance of a worst-case geopolitical scenario, one in which Iranian oil supplies are severely disrupted and the price reaction becomes “exponential rather than linear.”
As of early Friday, Brent futures surged nearly 9% to $75.36 per barrel, while WTI rose $6.16 to $74.20, following the news of Israeli strikes on Iran’s uranium enrichment facilities and military leadership. Iranian media reported explosions at the Natanz nuclear site and confirmed the death of Hossein Salami, commander of the Revolutionary Guards.
Also Read | Rs 1 lakh gold, $78 oil, 1,300 point Sensex crash: Israel’s Friday the 13th bombshellHere are the six key takeaways from J.P. Morgan’s latest oil market outlook, now playing out against an increasingly combustible geopolitical backdrop:1. A 7% chance of a nightmare scenario already priced in
According to the J.P. Morgan, oil prices reflect a “7% probability of a worst-case scenario,” in which the impact on supply goes beyond reduced Iranian exports. In such a case, the bank said, price surge would not be gradual but “exponential,” driven by panic reactions and wider regional contagion.
2. Oil could jump to $120, pushing U.S. inflation to 5%
“An attack on Iran could spike oil prices to $120, driving U.S. CPI to 5%,” the investment bank warned.Such a move would reverse recent progress on inflation and complicate monetary policy for the Federal Reserve, which has been preparing for a potential rate-cut cycle later this year.
3. Base case oil forecast held at $60–$65
Despite the heightened tensions, J.P. Morgan said it was “downplaying geopolitical concerns” and maintaining its base case for Brent crude in the “low-to-mid $60s oil for the rest of 2025, and $60 in 2026.”
The investment bank expects oil to average $60 per barrel in 2026. This forecast assumes that regional powers will act to prevent a full-scale conflict.
4. Strait of Hormuz closure seen as unlikely
The bank downplayed fears of Iran closing the Strait of Hormuz, a key global shipping chokepoint, stating: “The closure of Hormuz is a low-risk event as Iran would be damaging its own position, both economically and politically, by irritating its main customer.”
Roughly a fifth of global oil passes through this strait, and any disruption there would have dramatic effects on energy markets.
5. Gulf nations have a stake in stability
J.P. Morgan argued that major Middle Eastern producers have strong incentives to keep hostilities from spiraling.
“Main players in the Middle East have strong incentives to keep the conflict contained given the economic transformation currently planned and implemented in the Gulf region requires a sustained absence of conflict,” the bank said, citing the sweeping economic diversification plans underway in the Gulf, which depend on prolonged regional calm.
This includes massive infrastructure and diversification efforts in Saudi Arabia and the UAE.
6. Oil surged, markets sank as tensions boiled over
Oil prices spiked while global markets sold off on Friday after Israel’s offensive on Iranian military and nuclear sites. Brent crude gained $6 to hit $75.36 a barrel, while WTI futures rose $6.16 to $74.20. Gold, another haven asset, climbed 1.5% to $3,434 per ounce.
Meanwhile, Israel said it was preparing for retaliatory missile and drone attacks, declaring a state of emergency nationwide. Iran has vowed a response after losing top military officials, including Salami, and seeing key installations in Tehran and Natanz come under fire.
U.S. Secretary of State Marco Rubio said that Washington had no role in the Israeli operation, calling it a “unilateral action.”
The sudden escalation comes amid stalled nuclear talks between Washington and Tehran and ahead of a critical vote by the International Atomic Energy Agency on June 12 in Vienna, which could trigger a snapback of United Nations sanctions on Iran.
With oil supply risks now sharply elevated and diplomatic off-ramps narrowing, J.P. Morgan’s warning looks increasingly prescient.
Also read | Oil jumps more than 12% as Israel strikes Iran, rattling investors
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