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The global commodities strategy team at J.P. Morgan, led by Natasha Kaneva, has identified distortions in the oil price curve. The prolonged geopolitical conflict between the United States and Iran has extended the period of uncertainty in energy markets beyond the firm’s initial estimates, which projected a normalization of maritime navigation by mid-year.
Imbalances in the oil price curve
Consequently, energy markets have systematically postponed expectations for global supply stabilization. The current structure of crude futures conveys a scenario where maximum tension is situated in the present, projecting a progressive easing in the supply-demand balance that is continuously deferred over time.
Resolving these tensions appears to require a substantial impact on economic indicators, financial markets, or inflation indices. To date, U.S. equity assets remain near record highs, driven by investment in artificial intelligence and robust private consumption.
Likewise, monetary conditions reflect the strength of the U.S. economy in the face of the current inflationary context. Although Federal Reserve officials considered interest rate cuts at the start of the year, economic resilience has shifted expectations toward maintaining high rates or potential additional increases.
The bank’s analysis concludes that the futures curve presents a counterintuitive misalignment over the next 16 months. The firm’s estimates indicate that front-end prices are approximately $6 above their fair value, while the back-end shows a $10 discount.
As a result, the $80 per barrel projection set for the final quarter of 2026 could be only $8 below the actual expected level. The extension of the current geopolitical scenario would maintain the market structure without necessarily generating an excessive increase in international crude oil prices.
Source: Rigzone
Photo: Shutterstock
