JPMorgan Chase highlights two major misjudgments in the market: Energy independence won't save America, and the market is overly optimistic about the situation easing

April 7: Michael Cembalest, Chairman of J.P. Morgan Asset Management, released a new report noting the U.S.-Iran Gulf conflict has evolved from an "evil elimination" framing to a scenario where all parties face losses. The report highlights two key investor misjudgments about Iran: First, markets incorrectly view U.S. energy independence (as a net exporter) as a "firewall" against a Strait of Hormuz blockade or oil price shock. In reality, fossil fuels still account for 85% of U.S. final energy consumption. A global oil price hike would directly push U.S. domestic prices for crude, gasoline, jet fuel, etc., up by over 100% due to high pass-through rates—and price increases for hydrocarbons other than natural gas could even outpace those in Europe and Asia. Second, markets have underestimated the cost and effectiveness of Iran’s "hold the global economy hostage" strategy, while being overly optimistic about tension de-escalation. Iran has found controlling the strait cheaper and more effective than expected, leaving it with no pressure to compromise quickly. Cembalest emphasizes that a rapid shift to renewables to cut fossil fuel dependence at the current pace would take 10–15 years, calling this a "fantasy." Overall, the conflict has exposed limitations in U.S. military and energy strategy, with no clear winner. He also warns investors to be cautious of systemic risks.