Investing.com -- Goldman Sachs has lifted its U.S. inflation forecasts and trimmed its growth outlook for 2026, warning that the jump in oil prices tied to the war with Iran is now the primary channel of economic risk.

Goldman analyst Manuel Abecasis told clients in a note this week that the bank’s commodity strategists expect Brent crude to average $98 in March and April, “up 40% from the 2025 average,” before easing back to $71 by the fourth quarter of 2026.

In an upside scenario in which flows through the Strait of Hormuz are disrupted for a full month, the bank estimates Brent would average $110 in March and April.

“Our rules of thumb are that a sustained 10% increase in oil prices boosts headline and core PCE inflation by 0.2pp and 0.04pp, respectively, while lowering GDP growth by around 0.1pp,” Abecasis wrote.

On the back of its revised oil assumptions and the latest CPI data, Goldman has raised its December 2026 headline PCE forecast by 0.8 percentage point to 2.9%, and lifted its core PCE projection by 0.2 point to 2.4%.

It now expects 2026 GDP growth of 2.2% on a Q4-to-Q4 basis, down 0.3 point from its prior estimate.

The bank also warns that geopolitical risk historically depresses hiring and investment “in ways that extend beyond the effects of higher oil prices.” Goldman now sees the unemployment rate peaking at 4.6%.

A tougher inflation path means the Federal Reserve may wait longer to ease. The first cut is now expected in September rather than June, with a second in December, though Goldman noted that a weaker labor market could still pull cuts forward.