The global economy would suffer a large setback to growth if energy prices rise further and stay high for a lengthy period in response to the conflict in the Middle East, while inflation in the U.S. is set to jump, the Organization for Economic Cooperation and Development said Thursday.

In a quarterly report on the global economy, the Paris-based research body lifted its inflation forecast for the U.S. in 2026 to 4.2% from 3%, more than double the rate of price-growth targeted by the Federal Reserve.

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The global economy proved more resilient than expected in the face of President Trump’s tariff hikes last year, and the research body had been on course to raise its growth forecast for this year to 3.2% from 2.9% to reflect a continuing boost from higher AI-related investment spending and lower interest rates.

However, in late February the U.S. and Israel launched a series of attacks on Iran, initiating a conflict that has seen widespread damage to energy and transport facilities and largely closed the Strait of Hormuz, through which a fifth of the world’s oil production, as well as significant shares of its trade in natural gas and fertilizer usually transit.

“The forecast is shaped by two counteracting forces,” said Asa Johansson, director of policy studies at the OECD. “First, the global economy was resilient and was surprising on the upside. Then we had the war in the Middle East and that is acting as a drag. And of course it’s highly uncertain, since we don’t know the breadth and the duration of this energy shock.”

The OECD said it is now leaving its growth forecast for the global economy in 2026 unchanged under the baseline assumption that energy prices start to fall back later this year. However, it warned that should energy prices stay high for longer, the global economy could grow by just 2.6% this year, a loss of more than half a percentage point compared to the pre-war outlook, while the negative impact in 2027 would be even larger.

The OECD raised its economic growth forecast for the U.S. in 2026 to 2% from 1.7%, largely reflecting the AI boom. It lowered its growth forecasts for the eurozone, to 0.8% from 1.2%, and left its projection for China unchanged at 4.4%.

Of the 20 economies for which it provided forecasts, the largest downgrade was reserved for the U.K., where growth is now seen at 0.7%, down from 1.2% in the December projections. In contrast to the U.S., the U.K. was showing “weak” momentum even before the war started, Johansson said.

While the impact on growth may be relatively modest if energy prices start to fall back soon, even in that scenario inflation rates are set to jump, according to the new projections. The OECD forecast that the inflation rate across the Group of 20 largest economies will average 4% this year, having previously forecast that prices would rise by 2.8%.

The research body lifted its inflation forecast for the U.K. to 4% from 2.5%. It now sees prices rising by 2.6% in the eurozone, up from 1.9%, and by 2.4% in Japan, up from 2.2%.

However, it expects inflation rates to cool again in 2027 as energy prices fall back toward pre-war levels, and said central banks may not need to raise their key interest rates to counter what may be a short-lived pickup.

“The current supply-induced rise in global energy prices can be looked through provided inflation expectations remain well-anchored, but policy adjustment may be needed if there are signs of broader price pressures or weaker labour market conditions,” it said.

The OECD expects the Federal Reserve to hold its key rate at current levels through this year and next, but sees the European Central Bank deciding on a “modest” increase in the second quarter to “help ensure that inflation expectations remain well-anchored.”

The Bank of England is expected to leave its key rate at 3.75% through this year, and cut in early 2027. The Bank of Japan is expected to continue to lift its key rate at a gradual pace.

While the OECD said that much is uncertain about the course of the conflict and its consequences, one lesson already seems clear.

“Policies that improve domestic energy efficiency and lower reliance on imported fossil fuels over the medium-term are a priority,” the OECD said. “These can help lower exposure to future geopolitical tensions, as well as mitigate costs for households and businesses.”

Write to Paul Hannon at paul.hannon@wsj.com

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