Let alone traders, even Wall Street major JPMorgan has lost clarity on where oil prices are headed. “We simply don't know how to model the endgame,” analysts at the bank said, highlighting the uncertainty surrounding how the conflict could ultimately unfold.

At the start of the conflict, JPMorgan had assumed there were certain economic thresholds that the US administration would not cross. But six months into the war, many of those lines have been crossed, and there is still no clear exit strategy in sight, the bank said.

The uncertainty comes as oil prices have climbed above $100 a barrel, while inventories are at all-time lows. What is JPMorgan saying?

JPMorgan estimates Brent’s fair value at around $90 a barrel for September, compared with current prices near $106. That gap suggests markets are pricing in the risk of further supply losses beyond the estimated 10 million barrels per day already disrupted.

The bank pointed to mounting risks across the Middle East, including threats to shipping through the Bab el-Mandeb Strait and recent attacks affecting Saudi export routes. It also highlighted continued attacks on Russian refining infrastructure and Ukrainian cities, underscoring the persistent geopolitical risks facing global energy supplies.

Yet despite the scale of the supply disruption, oil prices have not risen as sharply as might have been expected because governments and consumers have relied less on inventory drawdowns, JPMorgan said. Global inventories of crude and refined products have fallen by about 555 million barrels since the conflict began, only around one-third of the decline the bank had projected earlier this year.

“By leaning much more on demand destruction and much less on stock draws, the market has been able to absorb an extraordinary supply disruption without a sustained rise in crude prices. Since the conflict began, Brent has averaged just $94,” it said.

JPMorgan said significant inventories are still available, particularly in China, Europe, Japan and South Korea, providing a buffer against a prolonged disruption. That could limit the need for crude prices to rise substantially in the near term.

The bank, however, cautioned that a prolonged disruption to Middle East supplies could push oil prices higher later this year as inventories decline further and the market becomes increasingly dependent on demand destruction to maintain balance. “In short, there is still enough dry powder to keep prices contained, for now,” the bank said.