Why JP Morgan Thinks Oil Will Stay Above $100 Even If The Strait Of Hormuz Reopens Immediately

There is a 33-kilometre strip of water between Iran and Oman that is currently deciding whether your grocery bill goes up, whether the rupee slips further, and whether your equity mutual fund has a good year or a bad one. The Strait of Hormuz, the world's most critical oil chokepoint, has been largely shut since February 28, 2026, when the US and Israel launched strikes on Iran, killing its Supreme Leader and triggering a full closure of the route. Oil prices shot from roughly $70 a barrel to a peak of $115 in six weeks. Now, even as Washington and Tehran inch toward talks, JP Morgan has dropped a number that should get every investor's attention: Brent crude will stay above $100 for the rest of 2026, even if the Strait reopens immediately.

Let's break down exactly what JP Morgan is saying, how it hits India harder than any other major economy, why US markets didn't flinch, and what you should actually do with your money as an Indian investor right now.

What JP Morgan Is Saying And Why It Makes Sense

JP Morgan's note, cited by Yahoo Finance (May 11, 2026), projects Brent crude to average $103 in Q2, $104 in Q3, and $98 in Q4 of 2026; for a full-year average of $96 per barrel. Their base case assumes the Strait reopens by June 1. Prices still don't fall back.

Think of global oil supply like a highway that's been shut for three months. Even after the road reopens, you can't undo the gridlock instantly. Tankers are stranded, refineries need time to ramp back up, and global inventories, particularly across OECD nations, have been drawn down to near-critical levels. JP Morgan calls this "operational stress," and with peak summer demand arriving in July, the math doesn't work in favour of lower prices even with an open strait. Saudi Aramco's CEO, Amin Nasser, went further on the company's Q1 earnings call: he called this "the largest energy supply shock the world has ever experienced".

The bottleneck simply shifts from the strait itself to tanker availability, refinery capacity, and logistics. Supply takes months to catch up. That's the core of the JP Morgan case.

Why India Gets Hit Hardest By The Oil

India imports 88.3% of its crude oil requirements as per the Ministry of Petroleum and Natural Gas. In FY2025-26, crude and petroleum products accounted for $174.9 billion, that’s 22% of India's entire import bill. Nearly 50% of India's crude, 60% of its LNG, and almost all of its LPG used to pass through the Strait of Hormuz.

The math is brutal: every $10 rise in crude per barrel adds $13-14 billion to India's import bill and widens the current account deficit by about 0.3% of GDP as per ICRA. Global brokerage UBS has already revised India's FY2027 GDP growth estimate down to 6.2% from 6.7% because of this shock.

The clearest signal came from PM Modi himself as on May 11, 2026, he personally appealed to Indians in Hyderabad to use public transport, carpool, and work from home to conserve fuel. When a head of state asks citizens to drive less, you know the pressure isn't theoretical.

The US: A Different Animal Entirely

The S&P 500 fell roughly 8% in the first weeks of the conflict, then recovered to all-time highs above 7,400 by May 2026. That's not a blip, that's resilience built on structure.

The US now needs just one-third the oil per unit of GDP compared to the 1970s. US crude exports hit a record 5.2 million barrels per day in April 2026. Add to that the AI-driven earnings boom from the Magnificent Seven, and you have a market that's largely walled off from oil shocks in ways India simply isn't.

What Made Money. What Didn't. Since The US-Iran Conflict

Source: TradingView 

What This Means For Indian Investors

Don't chase UCO or USO now. They're up a lot this year. Buying a commodity trade that has already run is exactly how retail investors hand money to people who got in three months ago.

The real problem is structural and not about this specific crisis. Your Indian equities, mutual funds, and real estate are all wired into the same oil-dependent economy. When crude rises, stocks fall, the rupee weakens, and inflation compresses real returns. Three hits, all at once, every time there's a Middle East crisis.

But there are ways through which you and your portfolio can be better placed:

1. Geographic diversification via US-listed ETFs is the move. When India's market fell 9%, the S&P 500 shook 8% and then hit record highs. An allocation of 15-20% in US-focused ETFs, tracking the S&P 500, Nasdaq, or even other geographical ETFs like South Korea, Taiwan, etc would act as a structural buffer every time India bears the brunt of such a shock.
2. Long-term energy exposure, selectively. XLE, the energy sector ETF, is up 29% YTD and pays dividends. It's cleaner than leveraged plays like UCO, which has lost ~70% over the last decade despite this year's surge. A small allocation (5-10%) to energy ETFs functions as portfolio insurance that pays out exactly when Indian markets are under the most pressure.
3. Gold as the inflation anchor. Gold was already up 22% YTD in 2026 before the war started. It corrected post-conflict on profit-booking, but rising oil → rising inflation → falling rupee is the exact environment where gold earns its place in a portfolio. 

The Strait of Hormuz will reopen, eventually. Oil prices will cool, eventually. But the underlying exposure doesn't change: India's economy runs on imported crude, and global disruptions will keep stress-testing that dependency. The investors who stay unshaken are the ones who diversified before the next crisis and not during it.

For Indian investors, this is less about predicting oil prices and more about recognizing concentration risk. The world is becoming more geopolitically fragmented, and portfolios built entirely around one economy may increasingly face shocks they cannot control. Diversification is not just about chasing returns, it’s about risk management.