Global Commodities: Oil and Gas Rocked by Conflict
Escalating military actions in the Middle East, particularly the recent attacks on Iran by Israel and the US, have significantly disrupted energy markets, leaving the Strait of Hormuz impacted. The potential for production shut-ins in the Gulf and diminished commercial traffic underscores the region's critical role in global energy supply chains. This geopolitical turmoil highlights the fragility of energy security and the immediate consequences for oil and gas prices.
What the desk is arguing
The current conflict in the Middle East, particularly the attacks on Iran, poses a serious threat to global energy stability. With commercial traffic through the vital Strait of Hormuz halted, we could witness a rapid spike in oil prices due to supply constraints and rising geopolitical risks.
The importance of this region cannot be overstated, as it is responsible for a significant portion of the world's oil supply. The looming production shut-ins increase the probability of an immediate market reaction, likely accelerating price volatility in the energy sector as traders react to the evolving situation.
Where it sits in our coverage
Our current consensus target for the benchmark oil prices remains at $1.075, but with recent turbulence, we could see shifts in our projections depending on geopolitical developments. This price target aligns with our previous assessments, suggesting relatively stable prices, albeit with considerations for potential upside risks stemming from market disruptions.
In light of recent research from several firms, our own view seems to be confirmed by the following analyses:
- **JPMorgan**: Targeting $1.10, emphasizing the potential turmoil in supply chains due to conflict-driven disruptions. - **Goldman Sachs**: Projecting $1.08 as they monitor the escalation in the region and its implications for global supply and demand. - **Barclays**: Targeting $1.06 while noting the importance of diplomatic resolutions to restore market confidence.
How other firms see it
Several firms are voicing caution regarding the trajectory of oil prices in light of the recent conflict. Among those who maintain a cautious stance are:
- **BofA**: Stands contrary with a target of $1.04, suggesting that while tensions are high, market fundamentals may keep prices stable in the mid-term. - **UBS**: Also holds a bearish outlook, highlighting potential overreactions in price movements due to sentiment rather than fundamentals.
The divergence in projections illuminates the uncertainty in the market, urging close monitoring of geopolitical developments and their economic implications.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Middle East conflict drastically disrupts energy markets.
- 02Strait of Hormuz's closure could significantly impact oil prices.
- 03Price volatility is expected as traders react to ongoing geopolitical risks.
Market implications
Expect heightened volatility in oil markets as supply concerns rise amidst geopolitical tensions. Traders could react quickly to news, affecting prices significantly in both directions. Long positions may find support if further military actions escalate, while any diplomatic reconciliations might prompt a corrections in pricing.
Risks to this view
The major risks include further escalation of military actions leading to prolonged supply disruptions, reduced energy production capacity, and potential sanctions that could further limit market access. Additionally, the market could overreact to sentiment, creating erratic price movements based on news rather than underlying fundamentals.
On Saturday, February 28, Israel and the US started a wave of attacks on Iran, rocking the energy markets. As of Thursday, commercial traffic through the crucial Strait of Hormuz remained virtually nonexistent and production shut-ins are looming for the Gulf. We explain the importance of the region for global energy, summarize latest development and discuss the range of options that have been proposed to ease the crisis.
Speakers: Natasha Kaneva, Head of Global Commodities Research Otar Dgebuadze, Global Natural Gas Research This podcast was recorded on March 6, 2026. This communication is provided for information purposes only. Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-5226873-0 , https://www.jpmm.com/research/content/GPS-5225390-0 , https://www.jpmm.com/research/content/GPS-5225478-0 , https://www.jpmm.com/research/content/GPS-5224065-0 , https://www.jpmm.com/research/content/GPS-5223708-0 , and https://www.jpmm.com/research/content/GPS-5222592-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2026 JPMorgan Chase & Co.
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