What the shock means, for now, is higher energy prices.
Brent crude and the US benchmark, West Texas Intermediate, have both surged since the war began, approaching $120 per barrel at one point on Monday, before falling back to just under $85 per barrel.
That is feeding through to costs faced by businesses and households.
In the UK and Europe, natural gas prices have almost doubled since before the war in Iran began.
Even in the US, which as a major oil and gas producer tends to relatively shielded from global price fluctuations, prices at the pump are approaching $3.50 per gallon, up from roughly $2.90 a month ago, back to levels last seen in 2024.
Last week, Goldman Sachs estimated that a temporary rise in oil prices just to $100 per barrel could knock 0.4 percentage points off of global economic growth.
But if the conflict is not resolved by the end of the month, analysts say that it could push global oil prices above the recent 2022 peaks seen after Russia’s invasion of Ukraine, with a chance of oil hitting $150 per barrel in some scenarios.
Kornfeind said that the knock-on impact for the economy would be “pretty drastic” at that point, as higher costs force households and businesses to reduce other spending and the wider economy slows.
