Iran Conflict May Hinder Global Growth and Fuel Inflation
Analysts indicated on Thursday that a temporary surge in oil prices to $100 per barrel could slow global growth by 0.4 percentage points, as a widening conflict in Iran disrupts essential oil and gas flows from the Middle East. Analyst anticipates that, under its baseline forecast, oil prices will rise slightly before stabilizing at an average of $76 per barrel in the first quarter of 2026 and $65 in the fourth quarter. In an optimistic scenario, it anticipates oil prices to increase to approximately $100 per barrel, before stabilizing throughout 2026.
Goldman projects a “modest” 0.1 pp drag on global GDP growth and a 0.2 pp boost to global headline inflation under its baseline forecast. A surge to $100 per barrel may lead to a 0.7 percentage point increase in global headline inflation. Historically, central banks have not responded directly to oil shocks; however, they tend to implement modest policy tightening in response to elevated inflation or significant price shocks, according to the brokerage. The global monetary policy outlook is expected to remain largely unchanged according to the baseline forecast.
However, policy could become more aggressive – potentially through a delay in rate cuts in emerging markets – if oil prices reach $100 per barrel or if increased costs are transmitted to consumer prices at an elevated rate. Higher oil prices are anticipated to exert pressure on real incomes and consumer spending, whereas oil-exporting nations like Canada and various Latin American economies may experience advantages.
