For each additional month of delay, oil prices rise by $8! JPMorgan: Brent oil may reach $114 in three months.

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Brent crude oil briefly returned above $100 per barrel this week. The market's focus is gradually shifting from the geopolitical conflict itself to expectations about the duration of the conflict, with this variable becoming a key factor determining oil price trends.

On July 24, JPMorgan's Global Commodities Research Team released its latest estimates, stating that if the Middle East conflict lasts for one month, the average monthly price of Brent crude is expected to remain around $94 per barrel; if it extends to three months, the average monthly price could rise to $114 per barrel. The team pointed out that for every additional month of supply disruption, Brent's average monthly price could rise by $7 to $8 per barrel. Meanwhile, the U.S. fuel market will also be under pressure; if risks further escalate, the national average gasoline price may once again surpass $4.50 per gallon.

This assessment is based on the backdrop of a continuous decline in global oil supply elasticity. Although weak demand and the activation of some alternative transport routes have partially buffered the supply gap, simultaneous pressure on the Strait of Hormuz and the Red Sea shipping lines is gradually narrowing the market's slack, and the potential for an upward price risk should not be ignored.

Oil Price Surge Then Retreat: Market Risk Pricing Remains Cautious

On Thursday, Brent crude rose more than 7% in a single day, once breaking through $100 per barrel to reach a two-month high. The main factors driving the surge were claims by the Houthi armed group that they had attacked two Saudi oil tankers in the Red Sea, and subsequent warnings from Trump that a "large-scale strike" against Iran was possible.

According to Xinhua, the Yemeni Houthi armed group said at dawn on the 23rd local time that they had attacked two Saudi oil tankers in the Red Sea, and stated that these tankers had violated the maritime blockade order recently announced by the organization. In addition, Xinhua cited U.S. media reports on Thursday the 23rd that President Trump said he was "seriously considering" resuming large-scale military action against Iran.

However, on Friday, market sentiment clearly eased, with Brent and WTI oil prices both pulling back by more than 2%. According to analysts cited in the reports, current oil prices have not fully reflected the risks under extreme scenarios. JPMorgan's calculations show that the $100-per-barrel Brent price is only about $13 higher than its fair value estimate in July ($87 per barrel), indicating the main factors currently priced in by the market are still limited geopolitical premiums.

Supply Recovery Slower Than Expected, Market Buffering Capacity Declines

The report points out that the global oil market is currently facing the dilemma of simultaneous narrowing of adjustment space on both supply and demand sides.

The supply side continues to be under pressure. Since the outbreak of the conflict, the cumulative loss of global oil supply has been about 11.1 million barrels per day. Previously, the market widely expected the Strait of Hormuz to gradually resume normal navigation by early June, but the actual recovery pace has lagged behind expectations. At present, transportation volume through the strait is only about 50% of pre-conflict levels, of which about 7 million barrels per day of crude oil relies on rerouted transport, and these alternative routes are themselves also subject to persistent security risks in the Red Sea region.

The demand side has provided some buffering for the market. Current global oil demand is down about 5.1 million barrels per day from pre-conflict levels, roughly offsetting 46% of the supply loss. However, institutions remind that this buffer is not unlimited. As supply disruptions persist, the market will increasingly rely on inventories, and oil prices are becoming more sensitive to any new risks.

The analysis team believes that the simultaneous uncertainty facing both the Strait of Hormuz and the Red Sea has made the market begin to pay attention to the possibility of long-term supply interruptions. However, from the current supply and demand structure, the oil market has not yet entered an "acute shortage" phase. Model estimates show that even if blockades of both major shipping lanes result in an additional daily supply disruption of about 4 million barrels, as long as global demand remains weak, the market still has the capacity to avoid a severe shortage.

The real risk is that if global demand rebounds in the future while supply disruptions remain unresolved, the current buffer space may quickly be exhausted, and upward pressure on oil prices will significantly intensify. For investors, the core variable for future oil price trends is gradually shifting from "whether the conflict escalates" to "how long the supply disruption will last."

Risk Disclaimer and Limitation of LiabilityThe market involves risks, and investment should be approached cautiously. This article does not constitute individual investment advice, nor does it take into account the particular investment objectives, financial situation, or needs of any individual user. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific situation. Investment decisions made based on this are at one's own risk. ```