The Organization for Economic Cooperation and Development (OECD) warns that the war in Iran could push U.S. inflation above 4% this year, exceeding its previous forecast by more than 1 percentage point. The closure of the Strait of Hormuz has disrupted oil and gas supplies, driving up energy prices and commodity costs. This shock, combined with geopolitical uncertainty, is expected to weigh on economic growth while increasing pressure on consumers and businesses.

Higher energy and fertilizer prices are likely to raise the cost of food and other goods, further fueling inflation. The OECD notes that the U.S. growth momentum from early 2026 may be offset by a slowdown in consumer spending, as rising costs strain household budgets. Meanwhile, the Federal Reserve faces a dilemma: higher energy prices could delay its ability to cut interest rates, despite lower tariff rates on imports. The global economy is projected to grow 2.9% this year, but the OECD warns that persistent disruptions in Middle East exports could derail these projections.

Britain is forecast to suffer the largest hit to growth among G20 nations, alongside a significant inflation surge. The OECD urges central banks to monitor energy shocks closely and calls for temporary, targeted government measures to address price pressures. With the Strait of Hormuz remaining a critical chokepoint, any further escalation in the conflict could exacerbate global economic instability. The situation underscores the fragility of supply chains and the interconnectedness of regional conflicts with global markets.