Goldman Sachs warns Iran conflict could slow global growth, stoke inflation

A temporary surge in oil prices to $100 per barrel 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 per barrel 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 per barrel, before normalizing over the course of 2026. 

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

 

A jump to $100 per barrel could fuel a 0.7 pp 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 per barrel 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.