Crude oil markets have seen notable gains following Israel’s recent missile attacks on Iran, with concerns growing that U.S. involvement could dramatically escalate the conflict. Analysts at JPMorgan are cautioning that destabilizing Iran could have significant, unintended consequences for global oil prices and geopolitical stability.
In a report released on June 18, JPMorgan analysts emphasized that the latest round of hostilities marks a clear departure from previous, largely symbolic tit-for-tat strikes seen last year. This time, Israel’s campaign appears broader in scope, targeting key elements of Iran’s nuclear infrastructure and missile capabilities while aiming to exert strategic pressure on Tehran’s leadership.
Adding to tensions, Bloomberg reported that senior officials in Washington are preparing for the possibility of a U.S. military strike against Iran as soon as this weekend, though final decisions remain uncertain. A direct intervention by the United States could transform the current regional conflict into a much larger and more volatile confrontation.
Despite these risks, oil prices have not yet surged dramatically. Brent crude has climbed around $10 since the initial strikes, currently hovering near $75 per barrel. According to JPMorgan, this price reflects a roughly 17% implied risk of a major disruption scenario—one in which Iranian oil exports are significantly reduced for an extended period.
Still, the bank believes the likelihood of Iran closing the Strait of Hormuz—a vital oil shipping lane—is low. Such a move would likely trigger a strong response from the United States, potentially being interpreted as an act of war.
Historical trends suggest oil market shocks driven by military conflicts tend to be temporary. However, when the conflict involves a major oil-producing nation, the price implications are often more severe and prolonged. JPMorgan highlighted that regime changes in oil-rich countries—whether through coups, revolutions, or other upheavals—can substantially alter oil production and pricing dynamics both immediately and over time.
An analysis of eight significant political transitions in oil-producing nations since 1979 revealed an average price surge of 76% from the beginning of conflict to the peak. Within the first month, oil prices typically rose by 5%, escalating to a 30% increase over three months, with prices eventually stabilizing about 30% above pre-crisis levels.
Although Iranian oil exports have not yet been visibly impacted, Brent crude is already trading 8% higher than prior to the onset of conflict. JPMorgan warns that if the situation in Iran deteriorates further, global energy markets could face prolonged and elevated pricing pressures.
“If history serves as a guide, further destabilization of Iran could lead to significantly higher oil prices sustained over extended periods,” JPMorgan added.