Analysts give up on predicting gas prices

As the war with Iran drags on into its seventh month, uncertainties over oil prices have even stymied the experts charged with predicting futures. This week, J.P. Morgan officially abandoned any attempts to anticipate the outcome, claiming that analysts don’t know how to model the end of the war fueling the chaotic gas price surge.

This stunning admission came down from the head of global commodities research at J.P. Morgan, Natasha Kaneva. According to CNBC, she released a client note Thursday stating, “For the first time since the start of the Iran conflict, we don’t have a baseline view” of the oil market.

’This will be a brief and temporary interruption.’

Kaneva followed that with, “We simply don’t know how to model the endgame.”

These fears are largely exacerbated by the continued struggle over the Strait of Hormuz. Despite President Donald Trump’s insistence that the United States “powerfully” controls the strait, Iran claims the opposite, saying that the vital shipping path is closed until Trump and Israeli Prime Minister Benjamin Netanyahu are removed from power.

According to Reuters, some commercial vessels are still permitted to pass, though the daily number has dropped dramatically from 125 vessels per day before the war to just four to 10 per day this past week. With oil tankers unable to move through as freely as before, oil supplies dwindle, and prices go up.

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Florian Gaertner/Photothek/Getty Images

Until recently, analysts remained hopeful that three approaching redlines would force Trump to make a deal to reopen the Strait of Hormuz by June. These included:

• oil prices exceeding $100 a barrel;
• the 10-year Treasury climbing to 5%; and
• the gasoline national average reaching $5.

The first two redlines were already crossed, with the third teetering on the edge as the national gas price average creeps up to $4.47 and counting, according to AAA. Halfway through September, there’s still no deal in sight, and analysts have all but given up on trying to predict the outcome.

Adding insult to injury, the East-West Crude Oil Pipeline in Saudi Arabia was struck by an Iraqi drone on September 11, further contributing to oil disruptions and growing gas prices. Yet despite mounting uncertainty, the Trump administration insists that the situation is under control.

“This will be a brief and temporary interruption,” Energy Secretary Chris Wright said after the incident. “It will be measured in days.”

The Associated Press reports that full restoration could take weeks. All of that remains to be seen.

For now, gas prices continue to rise across the nation, with the West Coast already exceeding $5 per gallon, while California nears $6 per gallon. The midterm elections also loom on the horizon.

Wright pledged on Wednesday that “diesel prices, gasoline prices, all of them will be coming back down.”

Editor’s note: This article has been corrected after publication to note that the redline is the 10-year Treasury climbing to 5%, not 10%.

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