JPMorgan admits it cannot model the war's endgame as Brent holds near $100 and the Houthis tighten Bab el-Mandeb

0. Weekly Arc

Since 9/12 the arc ran from escalation to contested de-escalation to a modelling stalemate. 9/12–13 brought Perim, Mokha and the East-West pipeline shutdown; 9/14–15 the Oman-hosted meeting collapsed and repairs were put at three to five weeks; 9/16–18 the tape softened on Saudi rerouting back through Hormuz and ship-to-ship transfers off Oman, with Brent sliding from about $108 to roughly $103.50–104. Today adds no new physical turn, but a rare public admission from JPMorgan that the endgame cannot be modelled, and the first reporting that Houthi attacks have reached Saudi tankers leaving Bab el-Mandeb.

1. Situation Overview

The past ~24 hours are a stalemate with two directly conflicting readings of the same waterway, overlaid on an explicit loss of forecasting confidence. Six months into a war that began in late February, “the most dire projections have not yet come to pass” ^[1]: Brent is hovering around $100, against about $69 on average last year and a brief peak of $126 in late April, and was around $104 on 9/17 versus roughly $72 before the war ^[1][2]. Against that, JPMorgan said at 9/18 13:43 UTC that total Middle East oil flows averaged 17.1 mbd over the past 10 days — only 6.1 mbd below the 2025 average — with Strait of Hormuz flows including ship-to-ship transfers in Omani waters climbing to 10.4 mbd, Fujairah outflows at 3.4 mbd, Omani exports at about 2.1 mbd and Red Sea flows averaging 2.1 mbd ^[3]. Gregory Brew’s reading in Foreign Policy is the opposite: traffic through the strait is roughly a fifth of pre-war levels, up from about 4–5 mbd in early August to approaching around 10 mbd ^[2]. Diplomatically the OFF-ramp remains shut — planned Gulf talks on reopening the strait, due earlier this week, are on hold ^[1] — while Trump is set to meet Gulf Cooperation Council leaders in New York on Tuesday 9/22 on the sidelines of the UN General Assembly ^[1]. On the second chokepoint the escalation is unambiguous: the Houthis have taken effective control of Bab el-Mandeb and, per CBS News, have begun targeting Saudi oil tankers exiting the Red Sea through it ^[2][4], and nearly 3,000 people have fled Yemen to Djibouti in under a week ^[4]. Net characterization: physically stalemated, diplomatically frozen, and now analytically unbounded.

2. Key Parties’ Positions

• [NEW] Negotiation progress: Planned talks among Gulf nations focused on reopening the Strait of Hormuz, which were supposed to take place earlier this week, have been put on hold ^[1]. Trump is set to meet the leaders of the Gulf Cooperation Council — Saudi Arabia, the UAE, Qatar, Oman, Kuwait and Bahrain — in New York on Tuesday 9/22 on the sidelines of the UN General Assembly ^[1]. Chinese President Xi Jinping is making a state visit to Washington next week, and the war in Iran and its economic impact are expected to be on the Trump–Xi agenda, but per the AP “the prospects of the world’s two biggest powers coming up with a breakthrough appear dim” (projection) ^[1]. The Trump administration has faced resistance when urging Beijing to use its economic leverage to press Iran to end the war and reopen the strait ^[1], and Chinese officials, who have expressed strong opposition to the US war, have bristled at recent administration threats to ratchet up economic pressure on nations and entities still doing business with Iran ^[1].
• [NEW] US / main pressuring party: Per CBS News, Trump said the next move could be to “annihilate” the regime ^[4]. A White House official, speaking on background, told Foreign Policy that “Iran is calling constantly and is desperate for a deal,” but that the president is “only open to making a good deal with Iran, whereby they permanently renounce their desire for a nuclear weapon,” adding: “Unlike previous presidents, President Trump will not be played by the Iranian regime. The President is satisfied letting the inevitable Iranian collapse play out.” ^[2] [ESCALATED] Treasury Secretary Scott Bessent said as he announced Operation Economic Outcast in late August: “Our objective is to sever every economic lifeline that sustains this tyrannical regime until Tehran stands alone.” ^[2] [ONGOING] Trump said last week he did not think the Iran war would end until after November’s midterm elections and that “right after the election, oil prices are going to be tumbling downward” ^[5].
• [NEW] Iran / counterparty: Per Foreign Policy, by nearly every metric — Iran’s ability to project power through proxies, its military capabilities, the strength of its regime and the status of its nuclear program — the United States is losing the war ^[2]; Iran has reportedly resumed ballistic missile production in underground facilities even after thousands of US strikes targeted its missile facilities and launch sites in the early days of the war ^[2]; and the US naval blockade appears to be working given Iranian oil exports have ground to a halt ^[2]. Despite top Iranian leaders including former Supreme Leader Ali Khamenei having been killed, the regime “remains very much intact and, in many ways, has only calcified” ^[2]. On the nuclear file, Iran still holds a roughly 440-kilogram (970 pounds) stockpile of highly enriched uranium whose precise location remains unknown ^[2], and IAEA Director-General Rafael Grossi said this week that the agency’s oversight of Iran’s nuclear program “deteriorated” this year, that “we have not conducted any in-field verification activities in Iran for more than six months,” and that it has been “well over a year” since the IAEA “lost continuity of knowledge” regarding Iran’s uranium stockpile ^[2]. Satellite imagery showed a “surge” in construction activity at Pickaxe Mountain, a suspected nuclear site, in 2026, per a recent Center for Strategic and International Studies analysis ^[2]. Eurasia Group’s Gregory Brew said: “If you wind the clock back to February and take a look at what the U.S. stated it was trying to do, it’s irrefutable that the U.S. failed in its main strategic goals.” ^[2]
• [ONGOING] Israel: Per Foreign Policy, Iranian proxies such as Hamas and Hezbollah are now far weaker than a few years ago, almost entirely due to Israeli actions in Gaza and Lebanon ^[2].

3. Military Actions

• [ESCALATED] Proxies (Houthis / Red Sea and Bab el-Mandeb front): The Houthis have taken effective control over the Bab el-Mandeb Strait ^[2], and the current round of fighting is centered on the Houthis beginning to target Saudi oil tankers exiting the Red Sea through the strait ^[4]. The group seized the port city of Mokha and strategic islands including Perim in an offensive against Saudi-backed Yemeni government forces ^[2], and per the AP has seized two strategic islands in the southern Red Sea, bolstering its ability to disrupt a key maritime shipping route ^[1]. The Houthis and Saudi Arabia are exchanging fire, reigniting tensions from a civil war that began in 2014 and was largely paused after a 2022 truce ^[2], with fighting restarting in recent weeks after that truce was broken ^[4]. There are now growing concerns that Yemen is on the verge of returning to full-blown civil war ^[2]. UNHCR said nearly 3,000 people, more than half of them women and children, have fled Yemen for Djibouti in less than a week, with thousands more waiting to cross, and that it is preparing for an additional 10,000 arrivals; UNICEF put internal displacement at more than 100,000 people ^[4].
• [NEW] Iran: Iran has reportedly resumed ballistic missile production in underground facilities after thousands of US strikes targeted its missile facilities and launch sites early in the war ^[2]. The AP notes separately that an Iran strike in July killed three US soldiers working at a Jordanian military base ^[1].
• [ONGOING] US: The US Navy and air assets provide defense for tankers moving through the Strait of Hormuz in small convoys ^[2]; Brew said this system has steadily increased the flow of oil through the strait over the last month and is helping delay a “general crisis” in energy markets, but is “not removing the risk” ^[2].

4. Strait of Hormuz Transit Status

• [ESCALATED] Control-status change: Tehran has now proved it can shut down the strait long term — an ability it had long boasted of but never actually demonstrated ^[2] — the US naval blockade appears to be working given Iranian oil exports have ground to a halt ^[2], and the Gulf talks meant to reopen the waterway have been put on hold ^[1]. Brew said traffic through the strait is roughly a fifth of what was seen before the war, with the situation “managed through a pretty considerable outlay of resources” ^[2]. [ONGOING] Saudi Arabia’s 750-mile East-West pipeline, shut last week after a drone attack Riyadh blamed on Iran-backed militants in Iraq, remains of unclear restart timing, with its closure impacting roughly 4 percent of the world’s oil supply ^[2].
• [ESCALATED] Transit data: JPMorgan’s flash note on 9/18 gave total Middle East oil flows averaging 17.1 mbd over the past 10 days, only 6.1 mbd below the 2025 average, with strait flows including ship-to-ship transfers in Omani waters at 10.4 mbd, Fujairah outflows at 3.4 mbd, Omani exports at about 2.1 mbd and Red Sea flows averaging 2.1 mbd ^[3]. The bank called the shift in Saudi routing the most notable change: Saudi oil flows through Hormuz averaged 2.9 mbd over the past six days versus only 0.7 mbd in August, and Saudi total exports reached a 10-day moving average of 5 mbd as of 9/15 ^[3]. Red Sea flows are weakening — the last crude tanker loaded on 9/12, though refined-product loadings remained at about 0.5 mbd ^[3]. Brew’s figures conflict with the bank’s aggregate framing: roughly 4–5 million barrels of oil flowed through the strait daily in early August, a number now approaching around 10 million, but traffic remains roughly a fifth of pre-war levels ^[2].
• [NEW] Shipping / insurance signals: Per CBS News, two ships were attacked in the Strait of Hormuz (no date given in the source) ^[4]; Iran is maintaining a blockade on the strait, cited as the reason the Houthis are targeting Saudi oil tankers ^[4]. Bank of America said last week it still expected shipping through the Strait of Hormuz to gradually pick up (projection) ^[1]. JPMorgan noted that routing larger volumes of oil through Hormuz requires managing shuttle tankers, ensuring sufficient VLCC capacity, coordinating ship-to-ship transfers and transit, and managing security — “a fairly complex operational chain” ^[3].

5. Asset Implications

Asset	Direction	Horizon	Driver	Anchoring fact
Brent crude	range ($95–105), soft bias	days–weeks	Competing flow measurements and JPMorgan’s ~$90 September fair value versus BofA’s $83 H2 forecast, against an unresolved strait closure and a live Bab el-Mandeb threat	§1 prints of ~$100 [1] and ~$104 on 9/17 [2]; §4 Hormuz flows at 10.4 mbd [3]
Gold / precious metals	→ (firm bias)	days	Fed tightening delivered this week with more signaled, against haven demand from a war no house can model; no fresh metal prints in this batch	§5 mechanism read; §2 red-line facts [5]
Global equities / risk sentiment	↓ (mild)	days	First Fed hike in more than three years, plus US political risk around an unpopular war	§2 Fed decision and congressional pushback [5][2]
USD / haven currencies	↑ (firm bias)	days	Fed hike plus 10-year borrowing costs above 5%; no FX prints in this batch	§2 red-line facts [5][6]
Energy / shipping value chain	↑↑	weeks–months	Ship-to-ship transfers in Omani waters, convoy escort, the Suez/Hormuz rerouting of Saudi barrels and Houthi targeting of Saudi tankers at Bab el-Mandeb	§4 [3][2]; §3 proxy actions [4]

Mechanism read: This is still a supply-shock tape, but the marginal information today is about the shock’s measurability, not its size. JPMorgan’s admission that it has “no baseline view” and does not know how to model the endgame is the most consequential line in the batch precisely because it is a forecast-structure statement rather than a price call: the same institution that assumed untouchable “economic red lines” — oil above $100, inflation at 4%, gasoline above $5 a gallon, 10-year borrowing costs at 5% — now says many have been crossed while the exit strategy is “less clear, not more,” and that with no de-escalation signals the assumption the disruption was temporary is “becoming increasingly difficult to sustain” ^[6][5]. That reframes the premium: what has kept Brent near $100 rather than at the once-feared doubling is not settled supply but substitution — the strait, including ship-to-ship transfers in Omani waters, has become the key alternative channel, with Saudi flows through it at 2.9 mbd over six days versus 0.7 mbd in August ^[3]. The constraint on that substitution is political, not logistical: JPMorgan itself says the workaround only holds on the premise that Iran allows passage ^[3].

The counterweight remains demand and policy, and both are still working. US crude imports data shows China averaged just 8.1 million barrels per day in the second quarter, almost 4 million bpd or 32% lower than in the first three months of the year, drawing on a strategic reserve built to about 1.4 billion barrels by the end of last year ^[1] — a demand-side buffer that analysts credit as having the single greatest impact on moderating prices since the war began ^[1]. On the policy side, the Fed raised rates this week for the first time in more than three years and signaled further increases this year and into 2027, with Chair Kevin Warsh saying the move was because “inflation is too high and has been for too long” ^[5]. Those two channels are why the cross-asset configuration is a range rather than a trend: if the binding constraint is a shipment chain that must be convoyed, insured and re-routed, the cleanest tells are freight, the Baba/Suez substitution rate and the Red Sea product legs, not the front-month Brent print.

6. Contrarian & Watch Signals

• Contrarian & tail risks: (1) The most important number today is a refusal to forecast. A major investment bank publicly withdrawing its baseline view is itself a volatility input — it signals that institutional positioning is being set on scenario weights rather than a central case, which mechanically widens the left and right tails and makes the market more sensitive to single headlines. (2) The measurements still cannot be reconciled, and the gap is the trade. JPMorgan’s 17.1 mbd Middle East flows and 10.4 mbd strait flows sit against Brew’s “roughly a fifth” of pre-war traffic; JPMorgan’s own caveat is that the workaround depends on Iran permitting passage. Whoever is right, the market is pricing a probability distribution over measurement, not just over barrels. (3) The nuclear file is the least-priced tail. A ~440-kilogram HEU stockpile of unknown location, more than six months without in-field IAEA verification, over a year without continuity of knowledge, and a construction “surge” at Pickaxe Mountain together mean the war’s stated casus belli is simultaneously unresolved and deprioritized — which is also why the administration’s actions indicate Iran’s nuclear program has been bumped down the White House’s priority list. (4) The second chokepoint is under-priced relative to the first. The escalation migrated from Hormuz to Bab el-Mandeb without the oil complex fully re-rating it, and the Houthis’ move from seizing Mocha and Perim to striking Saudi tankers exiting the Red Sea is a direct route into Saudi export volumes. (5) Domestic politics is now a war variable. The war is extremely unpopular with American voters, growing numbers of Republicans in Congress are voting to end it, and one GOP congressman has moved to impeach Defense Secretary Pete Hegseth over it — a durable constraint on escalation, but also a source of headline risk if the midterms go badly. (6) Bank of America’s scenario set is the tail map: $83 a barrel for H2 in light of persistent Hormuz disruption, $95–120 if violence escalates and keeps a chokehold on traffic, and spikes up to $150 if major energy infrastructure is damaged — all projections, and all below or around where the market now sits. (7) Second-order effects: a Yemen return to full-blown civil war would put Saudi energy infrastructure inside a durable targeting envelope, the Red Sea product leg is already thinning (last crude tanker 9/12, products about 0.5 mbd), and the Russia–Ukraine conflict continues to feed the distillate complex. (8) The China variable cuts both ways: Beijing’s stockpile draw has capped prices, but the Trump–Xi agenda on Iran has dim prospects per the AP, and the administration’s pressure campaign against entities trading with Iran risks colliding with Chinese officials already expressing strong opposition.
• Key watch signals: Whether Tuesday’s 9/22 Trump–GCC meeting in New York produces anything more than communiqué language, and whether the on-hold Gulf talks on reopening the strait are actually rescheduled — a convened meeting with an announced corridor breaks the premium, silence confirms the strait’s status as declaratory. Whether Xi’s Washington visit next week puts Iran on the table with a deliverable or merely re-states positions — the AP’s “dim” prospects are the baseline to falsify. Daily strait flows against JPMorgan’s 10.4 mbd incl. STS in Omani waters: a sustained print above roughly 10 mbd validates the resilience case, a slide back toward the August Saudi-Hormuz level of 0.7 mbd confirms the workaround was temporary. Whether Saudi Hormuz flows hold above the six-day 2.9 mbd pace and whether the 10-day moving average of total Saudi exports stays near the 5 mbd recorded on 9/15. Whether Houthi targeting of Saudi tankers exiting Bab el-Mandeb widens to third-country-flagged vessels — the clearest falsifier of the “Saudi-linked only” framing. Whether the East-West pipeline restart materializes, with the Red Sea crude loading gap since 9/12 the read-out. Whether Brent holds the $100 handle and whether the market’s deep confidence in JPMorgan’s ~$90 September fair value or BofA’s $83 H2 forecast reasserts itself — a sustained break either way is the cleanest trade signal. Whether the Fed’s first hike in more than three years is followed by a second this year, with the 10-year above 5% as the transmission level. And whether IAEA access to Iran’s stockpile is restored or Grossi’s “serious proliferation concern” escalates.
• Source quality control: JPMorgan’s note is relayed second-hand through the BBC rather than read directly, and one oil and gas industry source called it “unusual” for such a high-profile firm to issue such a note, adding it was a “reflection on the state of play” — a single-source characterization of the note’s significance ^[6][5][3]. The JPMorgan flash-note flow figures (17.1 mbd total, 10.4 mbd strait incl. STS, 2.9 mbd Saudi Hormuz flows) are proprietary cargo-tracking estimates that conflict in direction and magnitude with Brew’s “roughly a fifth of pre-war traffic” ^[3][2], so neither should be treated as the waterway’s measured truth; the bank’s own sustainability caveat is conditional on Iranian permission ^[3]. The claim that the Houthis are targeting Saudi tankers exiting the Red Sea is carried as a CBS News summary line without a named Houthi statement, date or vessel ^[4], and the “two ships attacked in the Strait of Hormuz” item is likewise undated and unattributed ^[4]. Foreign Policy’s core verdict that the US is “losing the war” is an analytical judgment, not reporting, and its forward-looking framings should be weighted as argument ^[2]; its quotes from the White House official are on background and unattributable by name ^[2]; its resumption-of-missile-production and Pickaxe Mountain items are hedged as “reportedly” and per a CSIS analysis respectively ^[2]. Grossi’s IAEA statements are primary-source but reflect an inspection-access dispute as much as a capability finding ^[2]. The AP’s price and forecast figures are wire copy quoting Bank of America projections, and the $150 spike scenario is explicitly conditional ^[1]. Refugee and displacement numbers are UNHCR/UNICEF figures relayed through CBS News and rest on agency reporting rather than independent verification ^[4]. Finally, note the deliberate omission in this batch: no party above provides confirmed transit counts for 9/18 itself, so the day’s flow level should be treated as inferred from 10-day averages rather than observed.

This report is intelligence & mechanism analysis, not investment advice.