President Donald Trump's military conflict with Iran threatens to deliver a severe economic blow to a global economy already reeling from historic tariff hikes. The war could push oil prices dramatically higher, creating a perfect storm for major economies. Bloomberg Economics has modeled potential scenarios showing how sustained energy price increases could push Europe toward recession while placing the Federal Reserve in an impossible position.

For the United States, the central bank would face conflicting pressures: higher inflation from energy costs versus presidential demands for lower interest rates. China faces additional strain as the end of discounted Iranian oil imports compounds existing challenges from Trump's tariffs and a real estate collapse. The initial days of fighting have been intense, with the endgame remaining uncertain.

Bloomberg Economics Chief Geoeconomics Analyst Jennifer Welch discussed these scenarios on Bloomberg Businessweek Daily, speaking with Carol Massar and Tim Stenovec about what the conflict means for oil prices, major economies, and Iran's future. The analysis suggests this geopolitical crisis could trigger a wave of global inflation that central banks worldwide will struggle to contain.