Finance
Global economy faces inflation and growth test amid escalating conflict in iran - Goldman
Published by Global Banking & Finance Review®
Posted on March 5, 2026
2 min readLast updated: March 5, 2026
Quick Summary
Goldman Sachs warns that if oil prices spike temporarily to $100/barrel amid Iran conflict, global growth could slow by 0.4 pp and inflation rise by 0.7 pp. Their baseline sees moderate impacts: growth down ~0.1 pp, inflation up ~0.2 pp.
Goldman Sachs: Iran Conflict Drives Oil Surge, Global Inflation and Growth Risks
Goldman Sachs Analysis of Oil Price Surge and Economic Impact
March 5 (Reuters) - 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.
Goldman Sachs Oil Price Forecasts
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.
Baseline Forecast Implications
- 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.
- Global monetary policy outlook will be mostly unaffected under the baseline forecast.
Upside Scenario: $100 Oil Price Impact
- A jump to $100 per barrel could fuel a 0.7 pp rise in global headline inflation.
- 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.
Central Bank Responses and Sector Impacts
- 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.
- 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.
(Reporting by Akriti Shah and Siddarth S in Bengaluru; Editing by Sriraj Kalluvila)
Key Takeaways
- •Baseline oil outlook: Prices to average around $76/barrel in early‑2026 and $65/barrel in late‑2026, implying modest macro impact (−0.1 pp on growth, +0.2 pp on global inflation).
- •Upside shock scenario: A temporary surge to $100/barrel could reduce global growth by 0.4 percentage point and raise headline inflation by roughly 0.7 percentage point.
- •Monetary policy: Under the baseline, central banks likely remain steady; but in a $100 oil scenario, rate cuts may be delayed in emerging markets as policy turns more hawkish.
Frequently Asked Questions about Global economy faces inflation and growth test amid escalating conflict in Iran - Goldman
1How could a surge in oil prices to $100 per barrel affect global growth?
According to Goldman Sachs, a temporary jump in oil prices to $100 per barrel could slow global growth by 0.4 percentage point.
2How might global inflation respond to higher oil prices?
A spike to $100 per barrel could raise global headline inflation by 0.7 percentage points, according to Goldman Sachs.
3What is the expected impact on monetary policy?
Monetary policy is expected to remain largely unaffected under the baseline, but could become more hawkish if oil prices stay elevated.
4Which economies may benefit from higher oil prices?
Oil exporters such as Canada and several Latin American countries may benefit from increased oil prices.