OECD finds global economy on brink of inflation spike due to US-Israeli attacks on Iran with Australia not immune

The OECD warns of a looming global inflation spike due to the ongoing US-Israeli attacks on Iran, which have disrupted oil supplies and pushed crude prices up more than 70% this year, with Brent crude trading around $104 per barrel. Inflation across G20 nations is now projected at 4% for 2026, up 1.2 percentage points since December, while growth forecasts for the Eurozone, UK, and South Korea have been cut by 0.4-0.5% for 2026. Energy exporters like the US and Australia are less affected but still face heightened inflation and growth challenges. In Australia, local economists see significant downward revisions to growth, reflecting rising oil prices and interest rates. ANZ forecasts 1.3% GDP growth for 2026, down 0.5 points from earlier estimates, with inflation peaking at 4.9% in June and averaging 4.5% by year-end—much higher than previous forecasts. The outlook assumes some easing in energy prices later in the year and no major fuel supply disruptions. Experts highlight that while inflation is the primary shock, household savings buffers may mitigate consumer impact. The market implications include elevated inflation risk driving potential price support for gold as a traditional inflation hedge. Key risks involve prolonged disruption to the Strait of Hormuz and sustained high energy prices, which could intensify stagflationary pressures globally and elevate safe-haven demand. Near-term catalysts include geopolitical developments in the Middle East and OPEC+ production responses, with potential volatility in precious metals trading desks should inflation data and oil prices surprise to the upside.