Iran Conflict Triggers Surge in Oil Prices, Global Recession Threat Looms

The escalation of armed conflict in the Middle East, particularly involving Iran, has triggered severe shocks to the global energy market in recent weeks. The significant rise in oil and gas prices is beginning to cause deep concerns among economists that a global recession may become unavoidable if energy costs remain high in the long term.

Moody’s Chief Economist, Mark Zandi, stated that a recession is now a serious threat to global economic stability once again. Based on the latest economic models, Moody’s places the probability of a recession occurring within the next 12 months at 49%. This figure is driven by weakening labour markets and a surge in energy costs, which have consistently preceded nearly every recession since the Second World War.

In Tuesday’s trading (17/3/2026), Brent crude oil, the international benchmark, climbed above US$102 per barrel. Meanwhile, West Texas Intermediate (WTI) surged past US$95 per barrel. Although still below record highs, this upward trend is considered highly concerning.

A more alarming scenario comes from Tehran. Ebrahim Zolfaqari, Iran’s military spokesperson, warned that oil prices could reach US$200 per barrel if military pressure on Iran continues. The threat of a blockade in the Strait of Hormuz is a key card, given that this route handles 20% of global oil trade.

Goldman Sachs notes that disruptions in this route would have an impact 17 times greater than production disruptions from Russia’s invasion of Ukraine in 2022. If Iran continues to disrupt shipments until March, oil prices are predicted to exceed the 2008 historical peak of US$147 per barrel.

In the United States, the impact of rising energy prices is already being felt in inflation figures. Fuel oil costs jumped 11.1% in just the January to February 2026 period. This situation is worsened by the loss of 92,000 non-farm jobs in February, pushing the unemployment rate to 4.4%.

This places the Federal Reserve in a difficult position. The US central bank is scheduled to conclude its policy meeting on Wednesday. Markets expect the Fed to maintain interest rates in the 3.5% to 3.75% range to balance energy inflation pressures with increasingly evident risks of economic slowdown. (Forbes/I-2)