How high could oil go, and what might the global economic fallout be?
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Fears of global economic fallout are rising as oil prices surge past $100 a barrel due to the US-Israel war with Iran. The potential for a prolonged conflict in this key energy-exporting region threatens a renewed inflation shock and could significantly impact global living standards. Closure of the Strait of Hormuz, a vital shipping route for oil and gas, could drive prices toward $150 a barrel. Goldman Sachs estimates the impact of Iran's blockade is already far greater than the peak impact on Russian oil production after the Ukraine invasion. While a short conflict could ease prices, prolonged uncertainty could keep oil above $100 throughout the year, potentially forcing central banks to raise borrowing costs instead of cutting them as previously anticipated.
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