JP Morgan struggling to forecast oil prices due to US
JP Morgan has admitted it is struggling to model the economic impact of the ongoing US-Iran conflict, noting that traditional 'red lines' for oil prices and inflation have been breached. The bank's rare admission highlights the extreme uncertainty surrounding the geopolitical situation and its effect on global markets.
Why it matters
The inability of a major financial institution to forecast market conditions underscores the high level of global economic instability caused by the conflict.
Share Save Add as preferred on Google Michael Race Business reporter, New York Getty Images 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".
The bank said it assumed at the start of the conflict that there would be "economic red lines" that the Trump administration would be unwilling to cross, and therefore it believed a deal would have been struck to open up the Strait of Hormuz shipping lane back in June.
It said such red lines included oil prices rising above $100 a barrel, inflation reaching 4%, gasoline topping $5 a gallon and rates on 10-year government borrowing hitting 5%.
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