The shipping traffic in the Strait of Hormuz has nearly come to a standstill, breaking the market's pricing assumption that &#34;extreme disruptions remain unlikely.&#34; The crude oil market is facing a rapid replenishment of geopolitical risk premiums, and the price trajectory will mainly depend on the duration of the conflict and the actual scale of supply disruptions, rather than long-term supply and demand fundamentals.
According to the Chase Trading Desk, on March 1st, JP Morgan released a flash report on crude oil titled &#34;Pricing Risks That Have Yet to Occur,&#34; which pointed out that tanker traffic in the Strait of Hormuz has slowed to nearly a halt, forcing the market to reassess geopolitical risks and the resilience of global energy trade .
However, the report also emphasized that the Strait of Hormuz has not been officially closed, and the waterway has not suffered direct attacks. If the conflict quickly eases, the impact on oil prices may be short-lived; if it escalates and lasts for several weeks, Brent crude could rise to the range of $100 to $120.
JP Morgan believes that the direction of oil prices will depend on four major variables: the number of affected barrels, the duration of the conflict, whether alternative supplies can quickly fill the gap, and the geopolitical trajectory.
As of the time of publication, Brent crude was priced at $79.4.
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<h2>Black Swan Landing: The Strait of Hormuz Nearly Completely Paralyzed</h2>
On March 1, 2026, a joint military operation by the U.S. and Israel officially commenced, with Trump publicly declaring that the goal was not only to destroy Iran's military capabilities but also to create conditions for overthrowing the Iranian regime.
The event triggered the actual blockade of the world's most important energy transport choke point (the Strait of Hormuz). According to JP Morgan data, the oil export volume through the Strait of Hormuz on February 28 had plummeted from a normal level of about 16 million barrels per day to about 4 million barrels per day, almost entirely Iranian crude.
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<h2>Variable One: Actual Affected Barrels—15.8 Million Barrels of Daily Capacity in Limbo</h2>
Although the Strait of Hormuz has not been officially declared closed, the shipping market has effectively achieved a de facto blockade through &#34;voting with their feet.&#34;
The following major global shipping giants have announced a suspension of passage:
<ul>
<li>Maersk: Suspended all vessels crossing the Strait of Hormuz starting March 1;</li>
<li>Hapag Lloyd: Suspended passage and imposed a war risk surcharge on Gulf cargo, effective March 2;</li>
<li>CMA CGM: Ordered vessels in or heading to the Gulf area to retreat to safe havens;</li>
<li>MSC: Suspended all bookings for Middle Eastern cargo;</li>
<li>Nippon Yusen, Mitsui O.S.K. Lines, Kawasaki Kisen Kaisha: Suspended all voyages through the Strait of Hormuz.</li>
</ul>
The signals from the insurance market are equally clear: war risk underwriters and Lloyd's underwriters have issued notices for policy cancellations and repricing, with war risk premiums potentially rising by as much as 50%.
**
Insufficient Backup Transportation Capacity: The Strait of Hormuz normally carries about 19 million barrels per day of liquid exports, of which approximately 16 million barrels per day are crude oil.
The existing bypass pipelines from Saudi Arabia (Petroline pipeline, capacity of 5 million barrels per day) and the UAE (Abu Dhabi pipeline, capacity of 1.5 million barrels per day) can only divert about 3.3 million barrels per day, leaving approximately 15.8 million barrels per day of crude oil exports without alternative evacuation channels.
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Currently, known losses in oil and gas infrastructure are relatively limited:
Missiles launched by Iran at Riyadh and the eastern provinces of Saudi Arabia were successfully intercepted and did not hit any oil and gas facilities; a sanctioned empty tanker with a capacity of 80 barrels per day was hit near Oman; a tanker carrying 500 barrels per day of gasoline was attacked; a berth at Jebel Ali Port in Dubai suffered damage from debris and is temporarily out of operation. At present, core oil and gas infrastructure has not been directly struck.
<h2>Variable Two: Duration of Conflict - 25 Days is the Critical Threshold</h2>
JP Morgan estimates that the seven oil-producing countries in the Gulf that rely on exports through the Strait of Hormuz (Saudi Arabia, UAE, Iraq, Kuwait, Iran, Qatar, Oman) have a total of approximately 343 million barrels of available onshore crude oil storage capacity. At current production levels, this equates to about 22 days of production buffer.
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Additionally, approximately 60 empty tankers currently docked in the Gulf can absorb an extra 50 million barrels of crude oil, extending the buffer time by 3-4 days.
The conclusion is that Gulf oil-producing countries can maintain normal production for about 25 days in the event of a complete disruption at the Strait of Hormuz. Once this threshold is exceeded, the depletion of storage capacity will force a reduction in production.
Regarding the duration of the conflict, President Trump stated in an interview with Axios that the action plan involves at least 5 days of bombing, but he also mentioned the existence of &#34;several exit options,&#34; and in another interview estimated that strikes against Iran could last about a month. This uncertainty means that the 25-day threshold is currently the most important risk observation point.
<h2>Variable Three: Alternative Supply and Strategic Reserves - The Only &#34;Fire Extinguisher&#34;</h2>
As the market enters a crisis, it is in a clearly oversupplied state. In the first two months of 2026, the global crude oil market is expected to have a surplus of about 1.4 million barrels per day, providing an initial buffer for short-term shocks.
However, if the conflict exceeds 25 days, forced production cuts could result in the loss of up to 16 million barrels per day of crude oil and refined product exports. Almost all effective idle production capacity is located in the Persian Gulf region itself, creating a dilemma where &#34;the only rescue force is in the fire&#34;:
<ul>
<li>U.S. shale oil: Can respond, but is limited by drilling, completion, and infrastructure construction cycles, with incremental supply taking months to materialize;</li>
<li>Russia: Theoretically, it could increase production by 300,000 to 400,000 barrels per day, but this is a drop in the bucket compared to the potential shortfall and will also take time;</li>
<li>Other non-OPEC oil-producing countries: They lack idle capacity and do not have the ability to respond in the short term.</li>
</ul>
Strategic reserves are the only buffer mechanism that can be utilized in the near term. OECD member countries currently have approximately 1.247 billion barrels of strategic oil reserves, including 935 million barrels of crude oil and 312 million barrels of refined oil. This is the last line of defense to prevent global oil prices from spiraling out of control in extreme scenarios.
<h2>Variable Four: Future Direction - Can the &#34;Venezuela Model&#34; be replicated?</h2>
JPMorgan maintains its previous judgment on the political level: The ultimate goal of the U.S.-Israel joint action is not to &#34;change the regime,&#34; but to &#34;change the regime's behavior.&#34; That is, to implement a &#34;precise reshaping&#34; of Iran similar to that of Venezuela in the past, forcing the Iranian regime to accept negotiations without triggering a complete national collapse.
President Trump stated that members of the Iranian Revolutionary Guard Corps are seeking exemptions, and Iran is ready to negotiate, which suggests there is a window for diplomatic resolution. If the conflict cools down before sunset on Monday (the Jewish holiday of Purim), the surge in oil prices may only be a temporary phenomenon.
The main tail risk lies in the Iranian regime losing command and control over the Islamic Revolutionary Guard Corps (IRGC) (given recent signs of this in the Oman attack incident), which would introduce a more unpredictable instability. Retaliatory actions from Hezbollah may further amplify this risk.
Meanwhile, Russia and China have only issued formal statements of concern and have not made substantial economic or military commitments, temporarily not constituting an additional variable for escalation.
JPMorgan cites historical data on eight medium to large oil-producing country regime changes since 1979, providing a highly valuable quantitative pattern: From the outbreak of conflict to the price peak, oil prices have averaged a 76% increase; in the first month after the outbreak of conflict, oil prices have averaged an increase of about 5%, and the average increase expands to 30% within three months, often stabilizing at about 30% higher than pre-conflict levels.
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The Iranian Revolution of 1979 is the most direct historical reference:
Iran's crude oil production plummeted from 5.3 million barrels per day in 1978 to 3.17 million barrels per day in 1979, and then to 1.4 million barrels per day in 1981. In January 1979, Iran's crude oil exports suddenly dropped by 4.8 million barrels per day, accounting for about 7% of the global supply at that time. Panic buying and speculative hoarding drove oil prices from $13 per barrel in mid-1979 to $34 per barrel in mid-1980, directly triggering a global economic recession. Oil prices did not return to pre-crisis levels until the mid-1980s.
As of today, Iran's crude oil production is about 3.3 million barrels per day, still far below pre-revolution levels.
<h2>JPMorgan's current forecast remains unchanged, but the window for extreme scenarios has opened</h2>
Considering the above four major variables, JPMorgan Chase clearly stated: At this stage, there will be no adjustment to the existing oil price forecast. Its average price forecast for Brent crude oil in 2026 is $58 per barrel (1Q26: $60, 2Q26: $59, 3Q26: $56, 4Q26: $55).
However, JPMorgan Chase also provided a clear scenario boundary: If the conflict lasts more than three weeks, the storage capacity of Gulf oil-producing countries will be exhausted and forced to cut production, and Brent crude oil may trade in the range of $100-120.
For investors, the current core message is: The oil market has shifted from a &#34;pricing known fundamentals&#34; model to a &#34;pricing unknown risks&#34; model.
25 days is the watershed that distinguishes short-term price impulses from structural supply crises. Until the direction of the conflict becomes clearer, the high volatility in the energy sector will continue, and the movements of strategic reserves and signals from diplomatic contacts will be key leading indicators for assessing price peaks

JP Morgan believes that the direction of oil prices depends on four major variables: the number of affected barrels, the duration of the conflict, whether alternative supplies can quickly fill the gap, and the geopolitical direction. If the conflict lasts more than three weeks, the storage capacity of Gulf oil-producing countries will be exhausted and they will be forced to cut production, and Brent crude oil may rise to the range of $100-120

- The Strait of Hormuz is witnessing a significant halt in shipping traffic due to escalating military actions, drastically lowering oil exports and forcing the market to reevaluate geopolitical risks.  
- Morgan Stanley reports that the current conflict could impact oil prices considerably, depending on its duration and the scale of supply disruptions; prices may rise to $100-$120 if the situation persists beyond 25 days.  
- Strategically, available oil reserves and international strategic reserves are critical buffers against price surges, while the potential for diplomatic resolutions remains tentative.

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Brent crude oil aims for $120? JP Morgan: Price direction depends on these four major variables