Sudden! Israel launches massive air strikes! Goldman Sachs latest warning: "The second shoe is about to drop!"

Tensions in the Middle East continue to escalate.

According to the latest reports, on the afternoon of March 22 local time, the Israel Defense Forces announced they had begun a “large-scale” airstrike on Hezbollah infrastructure in southern Lebanon. Israeli Prime Minister Benjamin Netanyahu stated that Israel will pursue leaders of the Iranian Islamic Revolutionary Guard Corps.

Meanwhile, Iran’s retaliatory military actions are still ongoing. On the 22nd, the Public Relations Department of the Islamic Revolutionary Guard Corps announced that they have used “new tactics and upgraded combat systems” to strike U.S. military bases in the Middle East and central and southern Israel.

The financial markets are closely watching the impact of the Middle East conflict on the global economy. Goldman Sachs, in its latest report, warned that the current global asset prices only fully reflect the “inflation shock” but ignore the destructive impact of high energy costs on global economic growth. Goldman Sachs also sharply downgraded its 2026 growth forecasts for major economies such as the U.S. and the Eurozone.

Israel: “Large-scale” airstrikes

On the evening of March 22, according to CCTV News, the Israel Defense Forces stated that they had begun a “large-scale” airstrike on Hezbollah infrastructure in southern Lebanon.

The IDF also announced that a senior commander of Hezbollah’s elite Radwan unit—Abu Khalil Bargji—was killed during an Israeli airstrike targeting southern Lebanon on the 21st.

According to Xinhua News Agency, Prime Minister Netanyahu on the 22nd said Israel will pursue leaders of the Iranian Islamic Revolutionary Guard Corps.

When asked by the media in the southern city of Arad, which was hit by Iranian missile attacks, Netanyahu said Israel “is pursuing the leaders of the IRGC with strong force, striking their facilities and economic assets.”

He stated that Israel has set two “clear goals”: to “completely destroy” Iran’s nuclear and missile programs, and to create conditions for regime change in Iran.

Over the past three weeks, several IRGC commanders have been targeted and killed.

On the night of the 21st, missiles launched by Iran hit the southern cities of Dimona and Arad, injuring 175 people, including 10 seriously. Xinhua reporters at the scene saw many buildings severely damaged, some walls collapsed, and debris and shattered glass everywhere.

Meanwhile, Iran’s retaliatory offensive continues. On the 22nd, the IRGC’s Public Relations Department announced the launch of the 74th wave of the “True Commitment-4” operation, using “new tactics and upgraded combat systems” to strike U.S. military bases in the Middle East and central and southern Israel.

The statement said Iran used multiple types of missiles, including “Emad,” “Fateh,” and “Ghaem,” as well as drones, to target the U.S. Fifth Fleet base, the Prince Sultan Air Base in Saudi Arabia, and Kurdish armed groups’ positions.

It also said that military bases and security centers in Tel Aviv, Petah Tikva, Holon, and Ramat Gan in Israel were hit by heavy missiles such as “Qadr,” “Castle Destroyer,” and “Khoramshahr-4,” causing severe damage.

The statement emphasized that if the enemy attacks Iran’s densely populated areas or energy infrastructure, Iran’s response will be “beyond expectations.”

Goldman Sachs Warning

In its latest flagship macroeconomic report, “Top of Mind,” Goldman Sachs warned that the current global assets only fully price in “inflation shocks” but ignore the devastating impact of high energy costs on global economic growth.

The report states that the “deadlock” in the Strait of Hormuz means that war is very unlikely to end in the short term. Once market expectations are proven wrong, a “growth slowdown (recession)” will be the next shoe to drop, leading to a sharp reversal in global asset prices.

Given the risk of prolonged crisis, Goldman Sachs has downgraded its 2026 growth forecasts for major economies like the U.S. and Eurozone, raised inflation expectations, and pushed back the Fed’s next rate cut from June to September.

Goldman’s commodities team quantified the scale of this shock: current estimates show that oil flow through the Persian Gulf has dropped by up to 17.6 million barrels per day, accounting for 17% of global supply—18 times the peak of Russia’s oil disruption in April 2022. Actual flow in the Strait of Hormuz has plummeted from the normal 20 million barrels per day to 600,000 barrels per day, a 97% decline.

Goldman warns that if the low flow persists and markets continue to focus on long-term disruption risks, Brent crude could break through its 2008 all-time high. Historical data shows that four years after the five largest supply shocks, affected countries’ production remains over 40% below normal. Since about 25% of the Gulf’s production is offshore, the complex engineering means that restoring capacity will be a very long process.

Senior Goldman Sachs economist Joseph Briggs proposed a key “rule of thumb”: every $10 increase in oil prices reduces global GDP by more than 0.1%, raises overall inflation by 0.2 percentage points (more in some Asian countries and Europe), and increases core inflation by 0.03–0.06 percentage points.

According to this calculation, the three-week disruption has already shaved about 0.3% off global GDP; if it lasts 60 days, it could reduce global GDP by 0.9% and push up global prices by 1.7%. Additionally, since the outbreak of war, global financial conditions have tightened by 51 basis points, sharply increasing recession risks.

Goldman Sachs believes that the core variable in this crisis is no longer U.S. military firepower but the navigation schedule of the Strait of Hormuz.