Here's what each additional month of Iran-conflict disruption means for oil prices

By Barbara Kollmeyer

JPMorgan says U.S. gas prices may move above $4.50 per gallon if conflict persists for two more months

A woman stands next to Iranian-made Zolfaghar missiles displayed at Azadi Square in Tehran on July 24, 2026. Oil has surged amid signs of new hostilities, but JPMorgan said with each month the conflict drags on, prices will rise even higher.

As investors come to grips with renewed hostilities over the Iran war and fresh threats to global supply, JPMorgan has put a price tag on what each additional month of disruption could mean for oil

"If the conflict is contained to one month, Brent is likely to remain capped at around a $94 monthly average. Eroding global inventory buffers have been largely offset by depressed demand and China's unique ability to sustain exceptionally low crude imports," wrote a team of analysts led by Natasha Kaneva, head of global commodities research in a note on Thursday.

However, they cautioned such buffers are "finite."

"Each additional month of disruption requires progressively larger releases from a shrinking pool of available barrels. As a result, we estimate that each additional month adds roughly $7-8/bbl to Brent, lifting monthly average prices to around $114/bbl if disruptions extend to three months," they said.

Global benchmark Brent crude (BRN00) (BRNU26) surged over 7% to $100 a barrel on Thursday, settling at a two-month high after Yemen's Houthi militants claimed responsibility for attacks on two Saudi tankers in the Red Sea. President Donald Trump, meanwhile, threatened a "massive attack" on Iran in response to the new threat to the flow of oil.

Prices eased some on Friday, with Brent down 2% to $98.81 a barrel, and U.S. crude futures (CL.1) (CLU26) off 2% to $90.38 a barrel, after settling at the highest in seven weeks on Thursday at $92.19 a barrel.

The JPMorgan analysts pointed out that $100-per-barrel Brent oil is still just $13 above their estimated fair value for July of $87 a barrel, suggesting markets are pricing in "a modest geopolitical premium."

Their estimate assumed a Strait of Hormuz reopening on June 1, with tanker traffic, including rerouting, back to 73% of prewar levels by now. Instead, traffic stands at 50%, including 7 million barrels a day of rerouted pipeline for flows increasingly vulnerable to Red Sea disruption.

Kaneva and her team with threats now for to two major waterways in the Gulf, markets are clearly viewing a prolonged stalemate as unlikely.

That's as the oil market also found a way to rebalance and keep prices fairly subdued by a drop in demand, which has fallen by 5.1 million barrels a day since the start of the conflict as the world has lost around 11.1 million barrels of supply. That has offset around 46% of the supply lost, they said.

The analysts said gas prices may not necessarily head toward $5 per gallon.. Even if disrupted flows through both straits fall another 4 million barrels a day from current levels, the market can sidestep an acute shortage as long as "demand stays close to today's depressed levels."

Gasoline prices on Friday averaged $4.1050 nationally, according to AAA.

"If disruptions persist for another month, the national average would likely rebound to around $4.20. If the conflict extends to two months, prices would likely move back above $4.50," they said.

-Barbara Kollmeyer

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

07-24-26 0549ET