JPMorgan: oil price to hit $120 if Hormuz stays blocked

JPMorgan Chase analysts issued a stark warning on potential oil market turmoil stemming from the intensifying conflict between the United States, Israel, and Iran.

The bank's global commodities research team, headed by Natasha Kaneva, outlined scenarios where Brent crude prices climb sharply due to disruptions in the Strait of Hormuz, a vital artery for global energy flows.

The warning comes against the backdrop of recent military actions that have already rattled markets.

United States and Israeli forces executed strikes under "Operation Epic Fury," eliminating Iran's Supreme Leader Ayatollah Ali Khamenei and nearly 50 other senior officials.

The operation targeted Iran's missile facilities, command structures, and leadership hubs using B-2 stealth bombers and precision missiles.

Iran responded with missile and drone assaults on Israeli territory and U.S. military installations in the Persian Gulf, including bases in Bahrain and the United Arab Emirates.

Casualties included at least 11 deaths in Israel and three U.S. service members killed with five more injured.

Oil markets reacted swiftly to the violence. Brent crude for April delivery rose 8.7% to $79.28 per barrel, while West Texas Intermediate gained 7.8% to $72.16 per barrel in early trading on March 2, 2026.

A drone strike on Saudi Arabia's Ras Tanura refinery that same day inflicted limited damage but underscored Iran's intent to target regional energy assets.

Strait of Hormuz Under Siege

The Strait of Hormuz, connecting the Persian Gulf to the Gulf of Oman, carries 20 to 21 million barrels per day of crude oil, condensate, and petroleum products.

This volume accounts for about 20% of worldwide daily oil consumption and nearly 30% of global seaborne oil trade.

Although no formal closure has occurred, the waterway faces a practical shutdown.

Hormuz traffic plummeted 70% from safety concerns, skyrocketing insurance premiums, and halts by major carriers.

War risk insurance costs jumped up to 50%, rendering most voyages uneconomical.

Around 200 tankers loaded with crude and liquefied natural gas either anchored or rerouted to evade the strait.

Shipping giants such as Hapag-Lloyd and CMA CGM ceased all passages through the area.

JPMorgan's analysis pegs the vulnerability of Gulf oil producers to such blockages.

The seven nations dependent on the strait (Saudi Arabia, the United Arab Emirates, Iraq, Kuwait, Iran, Qatar, and Oman) hold approximately 343 million barrels in onshore crude storage, excluding volumes afloat.

At prevailing production levels, this capacity covers roughly 22 days of output if exports halt.

An additional 60 empty tankers could store another 50 million barrels, adding three to four days before constraints bite.

Prolonged Disruption Risks Production Cuts

"Beyond the initial knee-jerk reaction, the trajectory of oil prices will ultimately depend on four variables: how many barrels are physically disrupted; how long the disruption lasts; in a prolonged disruption, whether credible replacement supply-including potential releases from strategic reserves-can be mobilized quickly enough to avoid a structural tightening of the global oil balance; and what comes next," Kaneva stated in the research note.

The team projected severe outcomes if hostilities persist.

"We estimate that if the conflict lasts more than three weeks, [Gulf] oil producers would exhaust storage capacity and would be forced to shut in production. Under this scenario, Brent could trade in the $100-$120 range. Given the timeline of these unknowns, we are not making changes to our existing price forecast at this stage," the analysts wrote.

Rerouting alternatives remain scarce, amplifying the strait's strategic weight.

The note also drew historical parallels, noting eight major regime changes in oil-producing countries since 1979 that triggered average price spikes of 76% from start to peak.

Iran's 1979 revolution, for instance, drove prices from $13 to $34 per barrel, with the country's current output at 3.3 million barrels daily still below the 5.3 million barrels achieved in 1978.

News Source: Morning Star.