Oil Prices Volatile Amid Israel-Hamas Conflict

In the most severe scenario of an uncontained Israel-Hamas war, oil prices could surge to $150 a barrel and market volatility could skyrocket, according to EY chief economist Greg Daco. This outcome, which could involve the involvement of the US or Iran, or both, would lead to a mild global recession, a 1.4% decline in global real GDP growth, and a loss of around $2 trillion in the world economy. Financial conditions would tighten, with stocks potentially falling 20% and the US dollar strengthening by 10%. Central banks would likely ease policy faster, but not cut rates to zero, in response to the inflationary shock.