Home · Business · Sep 22 archive
JP Morgan Struggles to Predict Oil Prices Amid US-Iran Conflict
Developing
In Short: Investment banking giant JP Morgan has admitted it is struggling to predict how oil prices will be affected by the ongoing US-Iran conflict, according to a rare note to investors.
JP Morgan highlighted several red lines that could trigger significant economic impacts, including oil prices rising above $100 a barrel, inflation reaching 4%, gasoline topping $5 a gallon, and rates on 10-year government borrowing hitting 5%.
Six months into the conflict, many of these red lines have been crossed, yet the exit strategy remains unclear.
Investors often base decisions on inflation expectations, and oil prices are a major factor in global price increases due to the commodity's widespread use.
The US central bank, the Federal Reserve, raised interest rates this week for the first time in more than three years, signaling potential further increases to combat rising prices.
High oil prices have contributed to the rising cost of living in the US and globally, with fuel and energy prices surging as colder months approach.
Trump recently told reporters, 'Right after the election, oil prices are going to be tumbling downward,' but added, 'I think it's going to take a little bit longer than the midterm.
What this adds
The admission by JP Morgan underscores the complexity and unpredictability of the US-Iran conflict's economic implications.
Background
A handful of House Republicans joined Democrats to pass a resolution aimed at reining in President Trump's war powers in Iran, marking a rare political divide within the party.
A handful of House Republicans defied President Trump by joining Democrats to pass a resolution aimed at curbing his war powers in Iran.
What's still developing
- Investment banking giant JP Morgan has said it is struggling to predict how oil prices will be impacted by the US-Iran war, telling investors in a rare note that "we simply don't know how to model the endgame".
- JP Morgan is a huge name in the financial world, so for the investment bank to admit its experts are grappling with working out the economic impact of the US-Iran conflict reflects the tricky nature of trying to predict President Donald Trump's next moves.
- While gasoline remains below $5 and inflation has also not reached 4%, oil prices have surged back above $100 in recent weeks and the interest rate - known as a yield - on government bonds, which are issued in order for the US to borrow money from financial markets, has ticked over 5%.