Investment banking giant Goldman Sachs warned Thursday that rising Middle East tensions could push oil prices to $100 per barrel, creating significant headwinds for the global economy as conflicts in Iran threaten to disrupt crucial energy supplies from the region.
The financial firm’s analysts project that such an oil price spike would reduce worldwide economic growth by 0.4 percentage points, while simultaneously driving up inflation across the globe.
Goldman’s current projections show oil prices climbing somewhat higher before settling back to an average of $76 per barrel during the first three months of 2026, then dropping further to $65 by year’s end.
However, in a more pessimistic scenario, the investment bank anticipates crude prices could surge to approximately $100 per barrel before returning to normal levels throughout 2026.
According to Goldman’s baseline predictions, the world economy would face a “modest” 0.1 percentage point reduction in GDP growth, coupled with a 0.2 percentage point increase in overall inflation rates.
Should oil reach the $100 threshold, global inflation could jump by 0.7 percentage points, the analysts noted.
The report indicates that central banks typically don’t respond immediately to oil market disruptions, though they often implement modest policy tightening when inflation rises or price shocks become severe.
Under Goldman’s standard forecast, worldwide monetary policy is expected to remain largely unchanged. However, policymakers might adopt a more aggressive stance – potentially delaying interest rate reductions in developing nations – if crude oil hits $100 per barrel or if increased costs affect consumer prices more dramatically than usual.
The analysts expect elevated oil prices to reduce real incomes and consumer spending in most countries, while oil-producing nations like Canada and various Latin American economies could see economic benefits from higher energy revenues.
