JPMorgan Ups Worst-Case Odds, Deutsche Bank Models 3 (Bad) Scenarios
it's All About Kharg Island
Bottom Lines:
The coordinated views of JPMorgan and Deutsche Bank (in contrast with Goldman Sachs) suggest a rising tail risk for oil markets. While neither forecasts immediate disruption, both stress that forward curves are misaligned with the magnitude of potential geopolitical shocks. Should further strikes hit Iranian core infrastructure, or should Iran respond at sea, price discovery will likely occur rapidly and disorderly. Previously JPMorgan saw a 7% chance of the unthinkable. Now they believe that is a 17% chance of Iranian Oil infrastructure being damaged resulting in an Oil price spike to between $120 and $130.
We made our own position clear in Oil Lessons From the Greatest Analyst of All Time as taught to us by Peter Beutel.
Here now is our breakdown and synthesis of the two banks mentioned in title.