The U.S.-Iran war has sent oil and gas prices surging while reviving inflation fears. In recent days, optimism has risen that the conflict could soon draw to a close, with the two sides considering another round of peace talks. However, the global economy could be in for an unpleasant shock if tensions escalate.
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Trade QQQ with leverage“The global outlook has abruptly darkened following the outbreak of war in the Middle East,” said the International Monetary Fund (IMF).
IMF Sees Iran War Driving Oil Higher and Growth Lower
In the IMF’s worst-case scenario of an extended war, oil prices would average $110 per barrel this year with global gross domestic product (GDP) growing by just 2%. Global economic growth under 2%, which the IMF defines as a recession, has only occurred four times since 1980.
Under the scenario, global inflation would climb to 5.8% this year before rising to 6.1% in 2027. The IMF has already lowered its 2026 U.S. GDP estimate to 2.3% from 2.4%. It also slashed its 2026 global GDP estimate to 3.1% from 3.3%.