- Downgrade. The OECD cut its 2026 global growth forecast to 2.8%, down from 3.4% in 2025, citing the energy shock from the US-Iran war and sustained Strait of Hormuz disruption.
- Fact. In a prolonged-disruption scenario — where the strait blockage and Gulf infrastructure damage persist into 2027 — the OECD projects world output could fall to just 2.1% in 2026 and 1.8% in 2027, approaching recession territory for major trading economies.
- Stake. Global inflation is now expected to reach 4.0% in 2026 even under the baseline scenario, driven by energy costs that have kept Brent crude above $100 a barrel and lifted fertiliser and industrial input prices across supply chains.
The Organisation for Economic Co-operation and Development published its June 2026 Economic Outlook on 3 June, offering a formal accounting of how the ongoing Middle East conflict is reshaping the global macroeconomic picture. The report, released from the OECD’s Paris headquarters, presented two scenarios depending on how quickly hostilities around the Strait of Hormuz are resolved. It linked directly to the IMF’s earlier warning that the Iran war and tariff pressure were already choking the global recovery.
Baseline vs. prolonged disruption
Under the baseline, which assumes a peace settlement and swift resolution of Hormuz access by mid-2026, world GDP growth falls from 3.4% in 2025 to 2.8% in 2026 before recovering to 3.1% in 2027. The prolonged scenario, in which energy infrastructure damage and shipping blockages extend well into 2027, produces growth of only 2.1% this year and 1.8% next year — a trajectory the OECD described as carrying “recession risk” for several major economies.
Inflation running hotter than forecast
The energy channel is the primary transmission mechanism. Brent crude has remained above $100 a barrel since the spring, feeding into industrial production costs, fertiliser prices and consumer energy bills worldwide. The OECD now expects global inflation to average 4.0% in 2026, up from 3.4% in 2025. Eurozone consumer prices rose to 3.2% in May 2026, the highest reading since 2023, hardening market expectations for an ECB rate hike at its 11 June meeting. Meanwhile, the US Federal Reserve enters its next FOMC meeting on 16–17 June with the federal funds rate at 3.50%–3.75% and April CPI already at 3.8%.
Trade and investment headwinds
Beyond energy, the OECD flagged tanker rerouting and supply-chain fragmentation as compounding factors. Gulf energy infrastructure damage has disrupted liquefied natural gas flows to Europe and Asia, while fertiliser exports from Gulf producers have slowed enough to affect food-production costs in emerging markets. The report did not single out specific countries by name in the headline release, but its two-scenario framework underscored how much of the global outlook now hinges on a single geopolitical variable: the duration of the Iran conflict.