JP Morgan said it lacks a clear baseline view for oil markets for the first time since the start of the US-Israeli war on Iran, saying it does not know how to model the conflict’s endgame. The bank initially assumed the U.S. administration would avoid crossing certain economic thresholds, but said many had been crossed six months into the conflict without a clear exit strategy. Oil prices have risen above $100 a barrel, gasoline has reached $4.37 a gallon and U.S. diesel has hit a record $6.31 a gallon ahead of winter, when seasonal demand peaks, while inventories remain at record lows. JP Morgan estimated Brent’s fair value at about $90 a barrel for September, versus current prices near $106, indicating that the market is pricing in the possibility of additional supply losses beyond the estimated 10 million barrels per day already disrupted. The bank cited risks to Middle East supply, including threats to shipping through the Bab el-Mandeb Strait, attacks affecting Saudi export routes, continued strikes on Russian refining infrastructure and attacks on Ukrainian cities. Despite the scale of the disruption, prices have been contained because demand has fallen and inventories have been drawn down less than expected. Global crude and refined-product inventories have declined by about 555 million barrels since the conflict began, roughly one-third of JP Morgan’s earlier projection, while global oil demand has run about 4.4 million barrels per day below year-ago levels. Brent has averaged $94 since the conflict began. The International Energy Agency said last week that global oil supply and demand appeared set to fall further than previously expected this year, while OPEC continued to forecast demand growth after cutting its estimate for a fifth consecutive month and expects demand to rise by 380,000 barrels per day in 2026. JP Morgan said inventories in China, Europe, Japan and South Korea provide a buffer against a prolonged disruption, potentially limiting near-term price increases. It warned that persistent Middle East supply losses could push prices higher later this year as inventories fall and the market relies more heavily on demand destruction to remain balanced. The bank said there was still enough available inventory to keep prices contained for now.