JPMorgan Chase points out two major misconceptions in the market: energy independence cannot save the United States, and the market is overly optimistic about the easing of tensions.

Mars Finance news. On April 7, Michael Cembalest, Chairman of JPMorgan Asset Management, released a new report describing how the U.S.-Iran Gulf conflict evolved from “cleansing evil” into a situation in which all sides incur losses. The report notes that investors hold two major misconceptions about the situation in Iran. First, the market misjudged the United States’ energy independence (as a net exporter) as a “firewall” that could withstand the Strait blockade or oil price shocks. But that is not the case—U.S. fossil fuels still account for 85% of final energy consumption. Global oil price increases would directly raise U.S. domestic crude oil, gasoline, jet fuel, and other prices with a transmission rate of more than 100%. The price increases for various hydrocarbons other than natural gas are even higher than those in Europe and Asia. Second, the market underestimated the costs and effectiveness of Iran’s strategy of “holding the global economy hostage,” and expectations for easing the situation were overly optimistic. Iran has found that controlling the Strait is cheaper and more effective than imagined, so there is no pressure for a quick concession. In the report, Cembalest emphasized that rapidly shifting to renewable energy to reduce dependence on fossil fuels would, at the current pace, take 10–15 years, which is a “delusional fantasy.” Overall, this conflict has exposed the limitations of the U.S. military and energy strategy, with no clear winner. Cembalest also reminds investors to be wary of systemic risks.