Top economist Mark Zandi pinpoints exactly how much oil can rise before it tips the US economy into recession

Oil has been flagged by forecasters as a possible catalyst for a US recession since the Iran war began, and economist Mark Zandi says he’s pinpointed the level at which crude could spark a downturn.

The Moody’s Analytics chief economist recently warned that factors such as rising oil prices and a weakening labor market could trigger a recession. On Monday, Zandi shared a new take on X, revealing the oil price at which he sees the US economy stumbling.

“Based on simulations of our global macroeconomic model, oil prices would only need to average close to $125 per barrel in the second quarter of this year,” he wrote. “With tensions still elevated, that’s not a stretch.”

Zandi noted that, as of now, he doesn’t see the US in a recession, but in his view, it wouldn’t require much to cause a downturn given the state of the US economy.

Oil prices have already soared well past $100 per barrel since the Iran conflict began, briefly hovering around $120 before edging back down. Brent crude was up 3% on Tuesday to $102.75 a barrel.

The economist said that his team expects oil prices to continue rising, providing a breakdown of their prediction model and their expectations for real GDP growth.

“Between our February forecast, done a few weeks before the conflict began, and our March outlook, done at the start of the hostilities, we raised our 2026 oil price forecast by nearly $15 per barrel,” he said. “This lowered our expectations for real GDP growth for the year by close to 20 basis points.”

Zandi added that in his team’s April forecast, they expect to raise their baseline oil price forecast by at least $10 per barrel, which would shave another 15 basis points from real GDP growth in the following months.

“With tenuous prospects for resolving the conflict with Iran, and financial markets under pressure, recession probabilities are high and rising,” he wrote. “We don’t yet anticipate an outright downturn in our baseline (most likely) outlook for the economy, but we’ve been aggressively marking down our forecast.”