JP Morgan Flags $150 Oil Risk on 12M Barrel-a-Day Shortfall
JP Morgan warned of structural repricing of energy risk after Trump signaled two to three weeks of strikes on Iran, including potential power plant targets boosting oil volatility. UBS estimates a 12 million barrel-a-day supply shortfall and warns inventories could fall below five-year averages, risking prices above $150 per barrel.
1. Trump's Strike Extension
Donald Trump stated the United States will continue striking Iran for two to three weeks and may target Iranian power plants if Tehran fails to reach an agreement, heightening uncertainty in oil markets.
2. Supply Shortfall Through Hormuz
The closure of the Strait of Hormuz, which normally carries about 14 million barrels a day, has contributed to a 12 million barrel-a-day supply shortfall versus pre-conflict flows, narrowing to roughly 9 million barrels a day after emergency reserve releases.
3. Price Risk and Inventories
UBS warns that global oil inventories have fallen to five-year averages and could dip below that range if disruptions persist, supporting the risk of prices rising above $150 per barrel this month.
4. JP Morgan's Risk Outlook
JP Morgan flagged a structural repricing of energy risk in response to the heightened supply disruption and price volatility, indicating potential impacts on trading revenues and market risk exposures.