Svmuu reported that European financial giant BNP Paribas has issued a severe warning about the global economic outlook in its latest quarterly outlook, suggesting that three potential scenarios, including oil prices reaching $200 per barrel, could plunge the global economy into recession. The Iran conflict has already caused a significant impact on the global economy, but has not yet completely derailed it. Compared with expectations at the beginning of the year, global GDP growth will slow, inflation will remain high, and central banks will maintain a more hawkish monetary policy.
Current oil prices are surging rapidly. On Wednesday, both U.S. and Brent crude continued to rise, with WTI crude's intraday gains once expanding to 5%, and Brent crude touching $109 per barrel for the first time since March 23. This follows Iran's threat of an "unprecedented" military retaliation against a U.S. maritime blockade, while White House officials stated that Trump discussed with oil companies a plan to potentially maintain the blockade against Iran for several months if necessary. BNP Paribas pointed out that, in addition to oil prices soaring to $200, there are two other related factors that could potentially trigger a global recession. Moreover, under the scenario of a prolonged conflict, these three factors are likely to occur simultaneously and reinforce each other.
The first risk is the disruption of energy supply in the Middle East, exacerbating global supply chain bottlenecks. Disruptions to shipping through the Strait of Hormuz could impede the transportation of global energy and critical components, potentially forcing rationed supplies of some materials.
The second risk is high inflation, forcing central banks to tighten monetary policy. Sustained monetary tightening will further suppress economic activity and amplify the risk of recession.