JPMorgan Forecasts 4.7M bpd Oil Cut as Treasury Rebukes $154B Insurance Estimate
JPMorgan analysts warn that Strait of Hormuz disruptions could cut Iraq and Kuwait oil output by up to 4.7 million barrels per day, fueling Brent’s climb toward $90 per barrel. Treasury Secretary Scott Bessent labeled JPMorgan’s $154 billion DFC insurance headroom estimate flawed following a $20 billion reinsurance program.
1. Analyst Forecast on Oil Output
JPMorgan’s research team projected that a sustained blockade of the Strait of Hormuz could slash combined Iraq and Kuwait production by 3.3 million barrels per day within eight days and by up to 4.7 million barrels per day by day 18. These cuts reflect precautionary shutdowns as storage reaches capacity and highlight mounting supply pressure that has pushed Brent crude toward $90.
2. Treasury Rebuke of Insurance Estimate
U.S. Treasury Secretary Scott Bessent publicly challenged JPMorgan’s calculation that the U.S. Development Finance Corp. (DFC) has $154 billion of remaining insurance capacity, calling the estimate flawed. His remarks coincided with a newly announced $20 billion reinsurance program designed to assure coverage for vessels in the high-risk Gulf region and stabilize tanker flows through the Strait of Hormuz.
3. Implications for JPMorgan
The dual developments—heightened oil price volatility and a high-profile dispute over risk analytics—could affect JPMorgan’s trading revenues and reputation in energy finance. Investors will be watching how the bank adjusts its risk models and client outreach as geopolitical tensions reshape insurance and credit demand in the oil shipping sector.