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Global economy faces inflation and growth test amid escalating conflict in Iran – Goldman

Illustration showing 3D-printed oil pump jacks, the Iranian flag and a rising stock graph

Photo by Reuters

5th March 2026

By: Reuters

  

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A temporary surge in oil prices to $100/bbl could slow global growth by 0.4 percentage point, Goldman Sachs analysts said on Thursday, as a widening conflict in Iran chokes off vital Middle East oil and gas flows.

Under its baseline forecast, Goldman expects oil prices to increase a bit further before moderating to $76/bbl on average in the first quarter of 2026 and $65 in the fourth quarter.

In an upside scenario, it expects oil prices to rise to about $100/bbl, before normalising over the course of 2026.

Under its baseline forecast, Goldman estimates a "modest" 0.1 percentage point drag on global GDP growth and a 0.2 percentage point boost to global headline inflation.

A jump to $100/bbl could fuel a 0.7 percentage point rise in global headline inflation.

Central banks have historically not reacted directly to oil shocks, but tend to tighten policy modestly when inflation is elevated, or price shocks are large, the brokerage said.

Global monetary policy outlook will be mostly unaffected under the baseline forecast.

However, policy could turn more hawkish – potentially through a delay in rate cuts in emerging markets – if oil prices hit $100/bbl or if higher costs pass through to consumer prices at a higher-than-normal rate.

Higher oil prices are expected to weigh on real incomes and consumer spending, while oil exporters such as Canada and several Latin American economies may benefit.

Edited by Reuters

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