Oil prices return to March levels as investors price in Iran-war escalation risk, with Brent trading about $20 above JPMorgan’s $94 fair-value estimate

Oil prices have climbed back to levels seen in March as investors weigh the risk of escalation in the Iran war. Brent crude for December delivery slipped slightly to $115 a barrel when trading opened Sunday night, after closing the previous session at its highest price since April.

Brent had risen nearly 7% over the previous week following reports that the U.S. and Israel plan to resume attacks after the midterms. Higher energy prices can push up inflation, while the S&P 500 and Nasdaq both fell last week.

Energy analysts attribute the price gains to a “geopolitical risk premium.” September data analyzed by Robin Brooks, an economist at the Brookings Institution, showed oil supplies from the Persian Gulf region were nearly back to pre-war levels, while demand had not increased meaningfully. JPMorgan’s pricing model puts Brent’s fair value at $94 a barrel based on supply and demand, about $20 below its current trading price.

JPMorgan analysts say rising shipping costs are also creating wide differences in what buyers pay for oil around the world, a change not reflected in the benchmark price. Before the war, crude prices in different regions closely tracked the benchmark; now, some producers are lowering prices to offset refiners’ higher freight costs. Natasha Kaneva, JPMorgan’s head of global commodities research, said geography is reshaping crude’s relative value around the world.