London: A sustained rise in global oil prices to approximately $140 per barrel over a two-month period could potentially push parts of the world economy into a mild recession, reports APA-Economics. This alarming forecast was highlighted in a recent report by the Oxford Economics analytical center.

According to Azeri-Press News Agency, the report suggests that such a scenario would likely be accompanied by escalating tensions in global energy markets and increased risks within supply chains. The speed of the subsequent economic recovery would heavily depend on how quickly shipping operations through the Strait of Hormuz can resume, as well as the reduction of oil prices, supply chain tensions, and financial market pressures.

The report further outlines that if Brent crude oil prices maintain an average of $140 per barrel for two months, coupled with a sharp rise in natural gas prices, global real GDP could potentially decline by 0.7% by the end of 2026. The analysis indicates that economic activities in regions like the Eurozone, the United Kingdom, and Japan might face mild contractions, while the United States could experience temporary stagnation, with rising unemployment and a potential approach towards recession.

Moreover, global inflation is expected to accelerate under this scenario. The report's authors predict that the global consumer price index (CPI) could peak at 5.8%, which, although significant, is lower than the 8.9% peak recorded in 2002. This is attributed to expectations that energy price increases will be more contained and supply chain disruptions less severe.

Despite the concerning outlook, the report concludes by stating that the probability of this worst-case scenario occurring is assessed as low.