Goldman Sachs economists have concluded that the ongoing conflict in Iran is unlikely to trigger a broad global supply chain crisis comparable to the COVID-19 pandemic disruptions. While the war is expected to push oil and gas prices higher, leading to a 0.3% reduction in global economic growth and raising headline inflation by approximately 0.5 to 0.6 percentage points over the next year, the impact is anticipated to remain largely confined to the energy sector.
Energy Prices and Economic Effects
The Goldman Sachs report highlights that risks remain skewed toward larger economic impacts if the Strait of Hormuz, a critical maritime chokepoint for Persian Gulf shipping, remains closed. The strait’s closure could exacerbate disruptions to oil supplies. Despite rising energy costs, the analysis projects only a modest increase in core inflation, between 0.1 to 0.2 percentage points. Global central banks are expected to closely monitor inflation due to recent sensitivities stemming from pandemic-related supply chain issues.
Limited Broader Supply Chain Disruptions
The economists emphasize a key difference from the 2021–2022 supply crisis: the current shock is concentrated in energy products rather than showing broad-based supply chain disruptions. They note that developed economies such as the U.S., the Eurozone, the U.K., Japan, and Canada have less than 1% of imports originating from the Middle East, contrasting with China’s and East Asia’s over 20% share in global trade.
The report suggests that critical input interruptions and just-in-time inventory challenges are unlikely because the Middle East is not a major re-export trade hub, with re-exports mainly consisting of yachts, tugboats, and floating cranes. Although Iran supplies about 20% of global methanol production—a chemical used in industrial adhesives, solvents, and paints—current assessments do not indicate significant choke points requiring immediate concern.
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