Oil inventories limit the pain of the Strait of Hormuz closure

Each month Oxford Economics’ team of 450 economists and analysts updates our baseline forecast for 200+ countries using our innovative Global Economic Model. Fully linking individual country models through global assumptions about trade volume and prices, competitiveness, capital flows, interest and exchange rates, and commodity prices, our model provides a rigorous and consistent structure for forecasting and understanding the impact of economic shocks.

Below is just the top-level summary of our analysis of the latest economic developments.

• Our forecasts for world GDP growth of 2.4% in 2026 and 3.1% in 2027 are little changed from a month ago. 
• We’ve cut our world growth forecasts significantly since the onset of the US/Israel war with Iran, but we still think the global economy will avoid a recession.
• The economic spillovers to the global economy from the closure of the Strait of Hormuz have been moderate to date because other regions have increased their oil output and run down their inventories, thereby curbing the scale of the oil supply shock. 

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