A severe disruption to global oil supplies stemming from the intensifying Middle East conflict could push U.S. equities into a sharp correction this year, analysts at Goldman Sachs warned, highlighting how the war involving Iran is emerging as a major risk for global financial markets.

In a downside scenario where oil supply shocks intensify and economic growth slows, Goldman said the benchmark S&P 500 could fall to around 5,400, implying a drop of roughly 19% from current levels. The index last closed at 6,632.19 on Friday, leaving markets near historically elevated valuations even as geopolitical tensions escalate.

The warning underscores growing concern among investors that the conflict could quickly spill over from energy markets into broader financial conditions, affecting inflation, corporate earnings, and global growth prospects.

The key risk outlined by Goldman centers on potential disruptions to energy flows through the strategically critical Strait of Hormuz, the narrow shipping corridor between Iran and Oman that carries roughly 20% of the world’s oil and liquefied natural gas shipments.

Interruption to shipping in the strait has triggered a major supply shock, pushing crude prices significantly higher and amplifying inflation pressures worldwide. Oil prices have already surged above $100 per barrel, rising sharply since the conflict escalated following military strikes involving the United States and Israel.

Energy analysts have warned that if the conflict broadens or shipping disruptions worsen, prices could climb further, raising the cost of fuel, transportation, and industrial production across global economies. For equity markets, that scenario could translate into weaker consumer spending, tighter financial conditions, and lower corporate profit margins.

Goldman outlined several scenarios to illustrate how markets could react depending on the scale of the economic impact. Under a moderate U.S. economic growth shock, the firm expects the S&P 500 to fall to about 6,300, representing a decline of nearly 5% from current levels.

While less dramatic than the severe oil disruption scenario, the drop would still represent a meaningful pullback for a market that has enjoyed a strong rally driven by technology stocks and investor enthusiasm for artificial intelligence.

The bank said that despite the risks, the baseline outlook for U.S. equities remains broadly constructive.

“The baseline outlook for U.S. equities remains constructive, but the war in Iran adds to the downside risk posed by elevated valuations,” Goldman said in its analysis.

AI Investment Boom Provides Partial Support

One factor cushioning the outlook for equities is the ongoing surge in corporate investment tied to artificial intelligence. Technology companies have been pouring billions of dollars into data centers, semiconductors, and cloud infrastructure to support AI development, creating a powerful investment cycle that has helped lift earnings expectations and market sentiment.

Goldman said the AI investment boom could offset some of the drag from modestly weaker economic activity, helping limit the scale of any downturn in the broader market. However, the bank also cautioned that the rapid rise of AI introduces its own uncertainties, including questions about how the technology will reshape industries, employment, and long-term productivity.

Reflecting the evolving risks, Goldman Sachs adjusted its valuation outlook for U.S. equities. The bank lowered its year-end forward price-to-earnings ratio forecast for the S&P 500 to 21, down from a previous estimate of 22, citing uncertainty surrounding the economic impact of AI and geopolitical tensions.

Under more adverse scenarios, valuations could compress even further.

Goldman said that if the U.S. economy experiences moderate growth disruption, the forward P/E ratio could fall to 19, while a severe oil supply shock could drive it down to 16, levels that would significantly reduce equity valuations even without a sharp drop in earnings.

This type of multiple contraction has historically played a major role in market corrections, particularly during periods of geopolitical instability or rapid inflation.

The warning also points to the fact that U.S. equities are trading near historically high valuations following years of strong gains. Much of the rally has been concentrated in large technology companies benefiting from the AI boom, leaving markets increasingly sensitive to any shift in investor sentiment.

Goldman previously cautioned earlier this month that global equities face near-term correction risks, citing a combination of geopolitical tensions, elevated valuations, and structural disruption tied to artificial intelligence. These factors, combined with rising oil prices and uncertainty surrounding global growth, have created a more fragile market environment.

Long-term outlook remains positive

Despite highlighting downside risks, Goldman Sachs maintained its year-end forecast for the S&P 500 at 7,600, suggesting that the bank still expects equities to recover if geopolitical tensions ease and economic momentum remains intact.

Such a rebound would likely depend on several factors, including stabilization in oil markets, continued corporate earnings growth, and sustained investment in artificial intelligence technologies.

For now, however, the escalating conflict involving Iran has introduced a new layer of uncertainty into global markets. If energy supply disruptions deepen and oil prices remain elevated, the resulting inflation shock could force central banks to keep interest rates higher for longer—an outcome that would challenge equity markets that have been buoyed for years by relatively loose monetary policy.

The federal government of Nigeria has launched the iDICE Startup Bridge, a nationwide programme designed to fund and nurture early-stage entrepreneurs, offering grants of up to N10 million ($7,215) for idea-stage founders and equity investments of $100,000 for startups that have already built minimum viable products.

The initiative, implemented through the Bank of Industry under the broader Investment in Digital and Creative Enterprises (iDICE) programme, represents one of the most structured government interventions aimed at strengthening Nigeria’s early-stage startup ecosystem.

The programme is financed by a consortium of international development finance institutions, including the African Development Bank, Agence Française de Développement, and the Islamic Development Bank.

Applications for the first cohort opened on March 16.

The Startup Bridge introduces a two-track framework designed to support founders from idea formation to early commercial traction, addressing one of the most persistent gaps in Nigeria’s technology ecosystem — access to early-stage capital and structured mentorship.

Nigeria hosts Africa’s largest startup ecosystem by funding volume, yet investment remains heavily concentrated in a small number of cities. Most venture capital deals in the country are based in Lagos, while Abuja and a few emerging clusters such as Ibadan and Port Harcourt attract a far smaller share of funding.

That geographic imbalance means many entrepreneurs across Nigeria’s 36 states operate without access to accelerators, venture capital networks, or startup mentors.

The iDICE Startup Bridge aims to address that imbalance by opening participation to founders across the entire country, including the Federal Capital Territory. Policymakers hope to unlock entrepreneurial talent in regions that have historically been overlooked by venture investors by deliberately widening the geographic reach of startup support programmes.

For Nigeria, where youth unemployment remains high and the population continues to grow rapidly, expanding the pipeline of technology-driven businesses has become an economic priority.

The programme’s first pathway, the Founders Lab, is a 12-week structured training programme designed for entrepreneurs who are still developing business ideas or working on early prototypes. Participants will receive training focused on validating business ideas, developing sustainable business models, and building minimum viable products.

The programme will also provide mentorship, workshops, and structured guidance from industry experts aimed at helping founders transform concepts into viable startups.

Each cohort will support 125 entrepreneurs, with two cohorts expected annually.

Out of the 250 participants trained each year, the top 100 founders who successfully complete programme milestones will receive grants of up to N10 million to support product development or the launch of their ventures.

“Founders Lab is a bridge that connects potential to proof, and proof to capital,” said Cindy Ezerioha, Head of Founders Lab at iDICE Startup Bridge.

“Each cohort will support 125 aspiring entrepreneurs, with a clear target of ensuring progress from concept to validated business models. This programme is built for people with innovative ideas, early prototypes, or unanswered questions about how to take their first real step.”

Growth Lab To Scale Promising Startups

A second track, the Growth Lab, will focus on startups that have already built products and demonstrated early traction. Selected companies will receive $100,000 in equity investment alongside operational support aimed at strengthening governance structures, refining business strategies, and preparing companies for larger fundraising rounds.

Participants will also gain access to institutional investors and venture capital networks. Startups that successfully raise additional funding from external investors may also qualify for match funding under the programme — a mechanism designed to crowd in private capital alongside public and development finance.

Such blended funding models are increasingly used globally to reduce investor risk while supporting emerging startup ecosystems.

The Startup Bridge is part of the broader iDICE programme, launched in 2023 with $617.7 million in funding to catalyse investment in Nigeria’s digital and creative industries.

The initiative was created to channel capital into sectors such as software development, digital media, gaming, film production, and other creative industries that can generate large numbers of jobs for young Nigerians.

Nigeria’s technology sector has grown rapidly over the past decade, producing several venture-backed startups and attracting billions of dollars in foreign investment. However, funding remains heavily skewed toward later-stage companies, leaving early-stage founders struggling to secure their first institutional backing.

By targeting founders at the idea and prototype stages, the Startup Bridge attempts to fill that structural funding gap. The programme made its first startup investment in late 2025 through Ventures Platform, one of Africa’s most active seed-stage venture capital firms.

“This programme created under the iDICE umbrella gives young entrepreneurs across the country a real opportunity to build or scale, and we are confident in its ability to reshape early-stage enterprise development and innovation outcomes over time,” said Kashim Shettima, Nigeria’s vice president and chairman of the iDICE steering committee.

Bank Of Industry’s Role In Scaling The Initiative

The Bank of Industry, which is implementing the programme, has played a central role in financing small and medium-sized enterprises across Nigeria. According to the bank, it disbursed ?636 billion to businesses across different sectors last year — the largest annual disbursement in its history.

Out of that amount, N43 billion went to enterprises in the digital and creative sectors.

“We are happy to replicate our success over time with the iDICE Startup Bridge as well,” said Dr. Olasupo Olusi, Managing Director and Chief Executive Officer of the Bank of Industry.

While Nigeria’s startup ecosystem has produced globally recognized companies and attracted significant venture capital over the past decade, early-stage founders continue to face major structural challenges. These include limited access to angel investors, inadequate mentorship, regulatory uncertainty, and weak connections to international capital markets.

Government-backed programmes like the iDICE Startup Bridge therefore aim to strengthen the earliest layers of the entrepreneurial pipeline — where many promising ideas fail due to a lack of resources or guidance. The effectiveness of the programme will likely depend on whether it can combine financial support with hands-on mentorship and investor connectivity.

Applications for the Founders Lab close on April 20, 2026, with startups selected through a merit-based evaluation process aligned with published programme criteria. If successfully executed, the initiative could help diversify Nigeria’s startup ecosystem geographically while building a broader base of technology entrepreneurs capable of driving innovation and job creation across the country.