Six months into a conflict that has proven complex, costly, and highly unpopular, there remains no end in sight to the war in Iran. That’s left the energy market — and the analysts and strategists who study it — with a deep lack of clarity.
“For the first time since the start of the Iran conflict, we don’t have a baseline view,” commodities strategists at JPMorgan, led by Natasha Kaneva, wrote to clients on Thursday. “We simply don’t know how to model the endgame.”
As the war enters its seventh month, the conflict has broadened to multiple fronts.
In the mouth of the Persian Gulf, the Strait of Hormuz — the world’s most critical chokepoint for global energy flows — remains essentially closed to through traffic as Tehran’s Revolutionary Guard Corps continues to threaten vessels in the region. Daily crossings of the waterway have remained in the low double digits, far below the average of more than 120 daily transits before the outbreak of war.
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To the west, Yemen’s Houthi militants have quickly intensified a pressure campaign against Saudi Arabia, capturing a key port city in Yemen and taking effective control of the Red Sea’s southeastern coastline. Tehran-backed militia groups in Iraq have struck the Saudi kingdom’s East-West pipeline, shuttering operations indefinitely on what had become the primary reroute for oil trapped in the Persian Gulf.
All of this has left Washington with an increasingly complex and cloudy path forward, with midterm elections that are set to be critical for the Republican Party’s control over both chambers of Congress less than 50 days away.
A woman walks near a billboard depicting U.S. President Donald Trump on a building in Tehran, Iran, July 27, 2026. Majid Asgaripour/WANA (West Asia News Agency) via REUTERS. · via REUTERS / REUTERS
“We assumed there were economic red lines the US administration would be unwilling to cross,” the JPMorgan strategists wrote. Oil prices are trading back over $100 per barrel. US gasoline is holding well above $4 per gallon, and diesel prices have risen to all-time highs above $6 per gallon. The 10-year Treasury yield has surpassed 5%.
“Six months later, many of those lines have been crossed, yet the exit strategy is less clear, not more.”
Futures on both international benchmark Brent crude (BZ=F) and US benchmark WTI (CL=F) held right at $100 per barrel on Thursday, pushed lower by projections that Saudi Arabia could quickly resume some — but not all — of the East-West pipeline’s 7 million barrels per day (bpd) capacity.
That’s left oil markets moving quickly toward a position where the assumption that the Middle East disruptions are temporary is “becoming increasingly difficult to sustain,” the JPMorgan strategists wrote. Where things go from here, the strategists argue, is less about the duration of the conflict and how the oil market finds — or fails to find — ways to continue clearing sales.
