AI Summary
5 min read“We simply don’t know how to model the end game.” That is what J.P. Morgan’s commodities team wrote in a research note, effectively abandoning their baseline forecast for oil markets. For Matt Smith, director of commodity research at Kepler, that admission resonated. “A lot of us could relate to that,” he said in this episode of Prof G Markets. The problem is not a shortage of data; it is that the political signals coming out of Washington and Tehran are so contradictory that even the largest banks have stopped pretending they can predict where prices are going next.
The Information Fog Around Iran
The most immediate source of volatility is the Trump administration’s stance on Iran. On a single day in late September, oil markets lurched in three directions. Brent crude fell 3% in the morning on hopes that Saudi Arabia’s East-West pipeline would restart and that diplomacy at the United Nations might make progress. Then President Trump delivered a speech at the UN, saying he had a “big decision” to make: strike a deal with Iran or “annihilate” it. Prices climbed back above $100. Then, hours later, Trump claimed his team had just concluded a “very good meeting” with Iranian representatives. Brent settled at $98.
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What you'll learn
- 1 (02:04) **The Oil Market's Unpredictable New Reality** - Ed Elson introduces the episode's thesis: oil markets are in uncharted territory due to geopolitical chaos.
- 2 (03:50) **Why No One Can Predict Iran Anymore** - Matt Smith explains why Trump's mixed signals and Iran's posturing have created a "holding pattern," not a resolution.
- 3 (05:31) **JP Morgan's "We Don't Know" Moment** - The commodities giant abandons its baseline forecast, a stark admission of the market's structural uncertainty.
- 4 (06:49) **The Diesel Crisis: A Silent Inflation Bomb** - While headline crude sits at $98, the real pain is in refined products, with US diesel at $6.50/gallon.
- 5 (09:29) **The 40% Export Gap That Could Break the Market** - Smith maps out a nightmare scenario where a US diesel export ban combines with Russian and Middle Eastern supply losses.
- 6 (11:23) **How Commodity Traders Have Changed Their Minds** - The mood among oil traders has shifted from complacency to genuine confusion about the war's endgame.
- 7 (13:27) **Segment Transition & Ad Break** - Ed Elson teases a second segment on sports betting and the DraftKings scandal.
+ Full timestamped outline available in the app
Guests on this episode
Show Notes
Ed Elson is joined by Matt Smith to break down how Trump’s latest threats are driving oil prices and where he thinks they’re headed next. Then, Jonathan Cohen returns to discuss the state of the sports betting market and what the regulatory landscape could look like going forward. Finally, Ed explains why he thinks the AI debate is the dumbest conversation of the year.
Matt Smith is the Director of Commodity Research at Kpler. Jonathan Cohen is the Policy Lead at the Institute for Boys and Men and author of Losing Big: America’s Reckless Bet on Sports Gambling.
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