OECD Warns of Economic Contraction as Gulf Energy Crisis Risks 'Dark Scenario'

The OECD has issued a grave warning regarding the stability of the global economy, cautioning that a protracted energy crisis in the Gulf could trigger a recession comparable in scale to the 2020 pandemic. The organization highlights the extreme vulnerability of global supply chains to disruptions in the Strait of Hormuz, which remains a critical artery for global oil trade. According to the analysis, a sustained energy shortage would lead to a severe supply-side shock, causing inflation to surge while industrial output plummets. This 'dark scenario' would create a stagflationary environment, leaving central banks with limited policy options as they struggle to manage the dual pressures of rising costs and slowing growth. The OECD urges immediate diplomatic efforts to maintain regional stability, noting that short-term energy alternatives are insufficient to prevent a systemic contraction. Ultimately, the crisis serves as a stark reminder of the urgent need for global energy diversification to mitigate future geopolitical risks to the world economy.