Will US-Iran Conflict Push Oil to $130 and Trigger a Global Recession? Here Is All You Need To Know

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At a moment of deep fragility for the global economy, the United States has launched airstrikes on three key Iranian nuclear sites, drastically escalating Middle East tensions. President Donald Trump called it a "preemptive strike" to eliminate Tehran’s enrichment capabilities.

But as tensions rise, markets fear a broader war, an oil supply shock, and a crippling blow to the post-COVID global recovery.

Bloomberg Warns of Escalation

Bloomberg Economics analysts warn that Iran may respond in three dangerous ways:

Direct attacks on US personnel or embassies in the Middle East

Strikes on Gulf energy infrastructure in Iraq, UAE or Saudi Arabia

Shutting down the Strait of Hormuz, the world’s most vital oil chokepoint

A full-blown closure of Hormuz could send oil soaring beyond $130/barrel, pushing U.S. inflation to 4% by summer.

Inflation Surge Could Delay Rate Cuts, Hit Stock Markets

With inflation already sticky and Trump’s tariff deadlines nearing, the double whammy of trade disruptions and energy price spikes could force the Federal Reserve and global central banks to pause or reverse easing plans.

“Higher oil prices and CPI spikes would be a nightmare for policymakers,” says Ben May, Director at Oxford Economics.

 

LNG Markets Under Threat

Not just oil, but liquefied natural gas (LNG) markets may see shockwaves. Qatar, which supplies 20% of global LNG, relies entirely on the Strait of Hormuz.

Disruption would send European gas prices surging, worsening the energy crisis in the West and squeezing developing economies.

OPEC+, China, and Emergency Stockpiles: Is Relief Coming?

There is some hope. OPEC+—led by Saudi Arabia—has spare production capacity, and the International Energy Agency (IEA) may coordinate emergency oil releases.

But these are short-term patches. If Iran retaliates militarily, investors may rush to safe havens like gold and the dollar, while equities nosedive.

Trump’s Tariffs and Global Fragility

To make matters worse, Trump's "reciprocal tariffs" on key trade partners are set to kick back in. That could further stall global commerce already strained by wars, shipping disruptions, and high interest rates.

Could This Be the Shock?

All eyes now turn to Tehran. If Iran chooses escalation over diplomacy, economists fear the world could slide toward a stagflationary spiral—high prices, low growth, and prolonged geopolitical uncertainty.

Also Read: Will Trump’s Iran Strike Send Oil to $100 and Crash Global Markets?