How Middle East Tensions Could Push Oil to Wild Highs
Oil markets are always twitchy when things get heated in the Middle East, and this latest warning from JPMorgan cuts right to the chase. Their analysts say oil prices could skyrocket to $120 or even $130 per barrel if the region slides into full-blown chaos. This isn’t just another headline; those numbers would send shockwaves through economies and grocery bills worldwide.
The big “what if” is centered on the Strait of Hormuz. It’s a tight maritime choke point, handling about 20% of the world’s oil exports. If that gets blocked or disrupted—whether by an actual military conflict or just the threat of one—suddenly, oil tankers can’t get through and supply all over the globe gets squeezed. JPMorgan points out that recent missile attacks and drone strikes in the area could embolden Iranian hardliners, ramping up tensions and the risk of someone making a move that spirals out of control. There’s a constant game of brinkmanship, and it doesn’t take much for things to get dicey.
Still, before you rush to fill up every jerry can you own, here’s some reality check. JPMorgan isn’t ripping up its regular forecast. Their base-case scenario for 2025 keeps Brent crude hovering in the low-to-mid $60 per barrel, and a flat $60 for 2026. Why so calm in the face of so many warnings? It comes down to the nuts and bolts of the oil world. Supply and demand fundamentals still look balanced, and unless a true worst-case scenario unfolds—like a complete shipping shutdown or a dramatic drop in output—the shockwaves probably won’t carry prices that high.
Who Wins and Loses if Oil Surges?
Those big price spikes don’t happen in a vacuum. Take Thailand. As oil prices inch up, so do a lot of other costs, and that pushes inflation higher. For people hoping for a break on their interest rates, that’s bad news since central banks might not have much room to cut if inflation starts to climb. It’s a tough balancing act between keeping growth on track and not letting prices get out of control.
But here’s where it flips. Energy and refinery companies—especially in markets like Thailand where they account for a massive chunk of the stock market—could see a totally different story unfold. Shares in companies like PTTEP, PTT, BCP, and PTTGC haven't kept up with oil’s small climb so far this year, which means they might have room to catch up if the price rally actually happens. For folks investing in energy stocks, a price spike could turn those laggards into top performers, at least for a while.
So, while JPMorgan’s scenario for an oil price explosion isn’t set in stone, the possibility hangs in the air every time headlines go red in the Persian Gulf. Markets, consumers, and politicians are all watching the same boiling pot, hoping it doesn’t tip over. But for now, the experts at the world's biggest bank are sticking with their call: volatility is real, but Brent crude still looks likely to settle right around $60—even if nobody is exactly betting the house on it.