JPMorgan Chase points out that the market has fallen into two major misjudgments: energy independence cannot save the United States, and the market is overly optimistic about the easing of tensions.

According to Mars Finance, on April 7th, Michael Cembalest, Chairman of JPMorgan Asset Management, released a new report describing how the US-Iran Gulf conflict evolved from a "purge of evil" into a lose-lose situation for all parties. The report points out two major misjudgments by investors regarding the Iranian situation. First, the market misjudged that US energy independence (as a net exporter) could act as a "firewall" against a Straits blockade or oil price shocks. However, this is not the case—US fossil fuels still account for 85% of final energy consumption, and a rise in global oil prices would directly push up the prices of crude oil, gasoline, and jet fuel in the US with a transmission rate exceeding 100%. The price increases for many hydrocarbons other than natural gas are even higher than in Europe and Asia. Second, the market underestimated the cost and effectiveness of Iran's strategy of "hijacking the global economy," and was overly optimistic about a de-escalation of the situation. Iran has found that controlling the Straits is cheaper and more effective than imagined, and therefore there is no pressure for a rapid retreat. Cembalest emphasizes in the report that a rapid shift to renewable energy to reduce fossil fuel dependence would take 10-15 years at the current rate and is a "wishful thinking." Overall, this conflict exposed the limitations of US military and energy strategies, with no clear winners. Cembalest also cautioned investors to be wary of systemic risks.