Oil Price Surge Threatens Global Growth, EBRD Warns
Sustained oil prices above $100 per barrel could significantly dampen global economic expansion and accelerate inflation, the European Bank for Reconstruction and Development (EBRD) forecasted on Thursday. The warning underscores the escalating economic risks stemming from the ongoing conflict in the Middle East, which has propelled energy costs higher.
In its analysis, the EBRD stated that a 10% increase in average oil prices historically correlates with a 0.1 percentage-point reduction in global growth. Since the conflict began nearly four weeks ago, benchmark oil contracts, including Brent North Sea crude, have surged 40-45%, trading above $105. The bank cautioned that if elevated prices persist alongside continued supply-chain disruptions for key commodities like chemicals and metals, global growth could be cut by at least 0.4 percentage points. Inflation, meanwhile, may rise by over 1.5 percentage points.
“Economies with high energy import bills, strong trade and remittance links to the Gulf are particularly exposed,” the report noted. The EBRD also indicated it will likely revise its growth forecast for its operational regions downward by up to 0.4 percentage points when it releases updated projections in June.
Beata Javorcik, EBRD chief economist, emphasized the rapid transmission of geopolitical shocks. “The conflict shows how quickly geopolitical shocks can ripple through energy markets, supply chains and financial conditions,” she said. She added that the broader fallout will pressure government budgets already strained by defense spending in Central Europe and high debt servicing costs in the southern and eastern Mediterranean and Sub-Saharan Africa.
Separately, the Organisation for Economic Co-operation and Development (OECD) maintained its global growth forecast of 2.9% for 2026 but revised European projections downward. The OECD noted that global growth had been resilient prior to the escalation and could have been 0.3 percentage points higher without the conflict.
The warning extends to the global trading system. Ngozi Okonjo-Iweala, Director-General of the World Trade Organization (WTO), told the opening of the WTO ministerial conference that the world is experiencing the “worst disruptions in the past 80 years.” She stated that the multilateral system has irrevocably changed, citing pre-existing destabilization in trade for energy, fertilizer, and food.
The converging assessments from major international financial and trade institutions highlight a compound threat: protracted high energy costs and fractured supply chains pose a clear and present danger to global economic stability, with the most vulnerable economies facing the severest strain.
