Oil prices could trigger an economic recession if the cost per barrel returns to historic highs
Oxford Economics maintains that the oil shock would affect growth. Photo: iStock
TL;DR
- Sustained oil prices around $140 per barrel could trigger a mild global recession.
- This scenario could reduce global GDP by about 0.7% by late 2026.
- Global inflation could average 5.1% in such a scenario, with a peak near 5.8%.
- The Eurozone, UK, and Japan may experience mild economic contractions.
- The US economy could stagnate, bordering on recession with rising unemployment.
- Higher oil prices would increase transportation and production costs, impacting food and essential goods prices.
- Central banks might adopt more restrictive policies, potentially increasing interest rates.
- A less severe scenario with oil prices near $100 per barrel would have a more moderate impact, avoiding widespread recession.
- The final outcome depends on the Middle East conflict and normalization of energy flows.