The European Bank for Reconstruction and Development (EBRD) has warned that a sustained rise in oil prices above $100 per barrel could slow global economic growth and push inflation higher as tensions in the Middle East continue to disrupt energy markets.
In its latest assessment released Thursday, the development bank said that a prolonged surge in oil prices triggered by the ongoing conflict between the United States and Iran, alongside Israel, could significantly affect global economic performance.
According to the bank, a 10 per cent increase in the average oil price is typically associated with a 0.1 percentage-point decline in global economic growth.
Since the start of the conflict nearly four weeks ago, benchmark oil prices have surged between 40 and 45 per cent, with Brent North Sea crude trading above $105 per barrel on Thursday.
The EBRD said that if oil prices remain above $100 for a prolonged period and supply chain disruptions involving chemicals and metals persist, the global economy could face notable setbacks.
“If oil remains above US$100 per barrel for a prolonged period and supply-chain disruptions involving chemicals and metals continue, global growth could be reduced by at least 0.4 percentage points, while inflation could rise by more than 1.5 percentage points,” the bank forecast.
The institution warned that economies with high energy import bills and strong economic ties with Gulf countries through trade and remittances could face greater exposure to the shock.
It also indicated that the growth outlook for regions covered by the bank may be revised downward by up to 0.4 percentage points when it releases updated forecasts in June.
The EBRD Chief Economist, Beata Javorcik, said the conflict highlights how quickly geopolitical tensions can affect global economic systems.
“The conflict shows how quickly geopolitical shocks can ripple through energy markets, supply chains and financial conditions,” she said.
Javorcik added that the broader economic fallout could put additional pressure on government budgets already strained by rising defence spending in central Europe and increasing debt-servicing costs in the southern and eastern Mediterranean as well as parts of sub-Saharan Africa.
Meanwhile, the Organisation for Economic Co-operation and Development (OECD) maintained its global growth forecast at 2.9 per cent for 2026, although it trimmed its outlook for Europe.
The OECD noted that the global economy had been performing relatively well before the escalation of the conflict and said growth could have been about 0.3 percentage points higher if the crisis had not intensified.
Also speaking at the opening of the WTO Ministerial Conference on Thursday, Director-General of the World Trade Organization, Ngozi Okonjo-Iweala, warned that the global trading system is currently facing severe disruptions.
“The world order and the multilateral system we used to know has irrevocably changed,” she said.
Okonjo-Iweala added that global trade had already been under pressure even before the conflict escalated, with disruptions affecting markets for energy, fertiliser, and food.
“The scale of the problems confronting the world today, even before the conflict in the Gulf, destabilised trade in energy, fertiliser and food,” she said.
