European governments are racing to blunt a fuel shock that even some analysts now refuse to forecast, as Brent crude holds near $100 a barrel and diesel prices climb across Europe.
The international oil market has been expensive for months. What has changed is the confidence of the people paid to explain it. JPMorgan told clients on Sept. 17 that, for the first time since fighting began around Iran about seven months earlier, its commodities team no longer has a baseline view of how the disruption ends.
"We simply don't know how to model the endgame," the bank's analysts wrote, after several economic thresholds they once assumed would force a diplomatic off-ramp, including oil above $100 a barrel, had already been crossed.
The bank said a Brent price near $90 would have been consistent with known supply and demand in September. Futures instead traded around $100 and higher as traders priced the risk of further losses that no one can yet measure. By Monday, front-month Brent was still hovering near $99 a barrel.
Inventories are doing little to cushion the blow. The U.S. Energy Information Administration has said prices are likely to stay elevated until Middle East oil trade is restored and stocks can be rebuilt. The International Energy Agency's September report put the scale of the drain in starker terms: observed global inventories fell another 95 million barrels in August, taking the cumulative draw since February to 507 million barrels, or about 2.8 million barrels a day. World oil supply is now projected
