Global economy faces inflation and growth test amid escalating conflict in Iran – Goldman

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.

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.

* Under its baseline forecast, Goldman estimates a “modest”0.1 pp drag on global GDP growth and a 0.2 pp boost to globalheadline inflation. * A jump to $100 per barrel could fuel a 0.7 pp rise inglobal headline inflation. * Central banks have historically not reacted directly tooil shocks, but tend to tighten policy modestly when inflationis elevated, or price shocks are large, the brokerage said. * Global monetary policy outlook will be mostly unaffectedunder the baseline forecast. * However, policy could turn more hawkish – potentiallythrough a delay in rate cuts in emerging markets – if oil priceshit $100 per barrel or if higher costs pass through to consumerprices at a higher-than-normal rate. * Higher oil prices are expected to weigh on real incomesand consumer spending, while oil exporters such as Canada andseveral Latin American economies may benefit.

(Reporting by Akriti Shah and Siddarth S in Bengaluru; Editing by Sriraj Kalluvila)