JPMorgan lays out a worst-case scenario for Israel-Iran that could send oil prices spiking 75%

• Oil prices could soar into the triple-digits in the worst-case scenario, JPMorgan analysts said.
• The bank sees crude trading as high as $130 a barrel in the event of supply disruptions.
• The outlook for oil largely depends on Iran's response to the US's attack over the weekend, JPM said.

Markets are muted in their reaction to the weekend strikes on Iranian nuclear facilities by US bombers, but a top bank is eyeing one scenario that would produce a massive spike in oil prices.

Analysts with JPMorgan's global commodities research team said markets are pricing in a 21% chance that the conflict between Israel and Iran could disrupt energy production in the Persian Gulf, a development that would cause oil prices to spike as much as 75% from current levels to $120-$130 a barrel.

The said the risk premium is already partially reflected in prices, which are about $12 higher than their forecast of $66 a barrel for June.

"This suggests a one-in-five chance of a worst-case scenario, where the broadening of the conflict could impact flows in the Strait of Hormuz or that a more general Middle East conflagration could ignite retaliatory responses from major oil producing countries in the region responsible for a third of global oil output."

JPMorgan said the disruption to production could play out in a few ways.

1. Disruption to a critical oil passage. The conflict could impact oil flowing through the Strait of Hormuz, a key route for oil exporters to markets in the West.
2. Expanding conflict. Other oil-producing countries in the Middle East could get involved in the conflict. Oil producers in the region account for around a third of the world's oil production, the bank estimated.

Still, the bank added that its base case is "anchored by our supply-demand balance, which shows that the world has enough oil."

"Brent oil prices have averaged just under $67 a barrel quarter-to-date, which is precisely in line with our forecast of $67/bbl for 2Q25. Based on our forward physical oil balances, oil is anticipated to trade in the low-to-mid $60 range for the remainder of 2025, and settle at $60 in 2026," the analysts wrote.

Conflict unfolding

Crude prices jumped over the weekend after the US bombed Iranian nuclear sites, though oil dipped slightly on Monday as markets braced for the next stage of the conflict.

Brent crude traded as high as $76 a barrel on Monday, up around 14% from its price on June 12. The international oil benchmark is up around 26% from its low in early May.

WTI crude traded around $74 a barrel, up 9% from June 12. WTI prices are up 30% from their low last month.

The outlook for oil largely depends on how Iran will respond to the US's attack over the weekend, the JPMorgan analysts said, pointing to potential retaliatory measures, like Iran attempting to close the Strait of Hormuz or disrupt exports in the Red Sea.

Oil price shocks from previous military conflicts have also tended to be short-lived, the analysts wrote in a note last week. Barring one conflict in 1973, there have been no conflicts related to Israel over the last 58 years that have had a "lasting impact" on crude prices, the bank said.