IMF Warning: Iran Conflict Driving Sustained Energy Price Increases, Likely to Push Up Global Inflation and Drag on Growth

The International Monetary Fund (IMF) on Thursday said it is closely monitoring the Iran conflict and its impact on energy production, warning that if energy prices continue to rise, it could push up inflation globally and slow economic growth.

IMF spokesperson Julie Kozack stated at a press conference that the conflict has severely disrupted maritime transportation of oil and natural gas, causing crude oil prices to rise more than 50%, now surpassing $100 per barrel.

Kozack said the IMF has not received any emergency financing requests from member countries but is prepared to provide support at any time. She also mentioned that IMF officials are maintaining close communication with finance ministers, central bank governors, and regional institutions of member countries.

She noted that the overall economic impact of the war will depend on the duration, intensity, and scope of the conflict. The IMF will include an assessment of these effects in its latest World Economic Outlook, scheduled for release during the spring meetings of the IMF and the World Bank in mid-April.

Citing an IMF “rule of thumb,” Kozack said that if energy prices increase by 10% over a year, it could raise global inflation by about 0.4 percentage points and reduce global economic output by 0.1% to 0.2%.

If oil prices remain above $100 per barrel over the next year, it will have a significant impact on global inflation and economic output.

She also emphasized that, amid rising energy prices, central banks should remain highly vigilant, focusing on whether inflation is spreading from the energy sector to broader areas and whether inflation expectations remain stable.

Kozack added that the IMF’s preliminary assessment suggests the conflict will weaken the economic growth of Gulf Cooperation Council (GCC) countries, though no specific data was provided. She stressed that the actual impact largely depends on these countries’ ability to restore oil and natural gas exports.

On Wednesday, the Israel Defense Forces attacked facilities related to the South Pars gas field in Bushehr Province, southern Iran. Subsequently, Iran announced it had targeted multiple critical energy facilities in Qatar, Saudi Arabia, and the UAE, including the world’s largest liquefied natural gas (LNG) facility — Qatar Ras Laffan LNG complex.

The latest attacks indicate the conflict is evolving into an energy war. Damage or destruction of infrastructure could trigger a longer-term supply crisis, causing more severe shocks to the global economy.

Arne Lohmann Rasmussen, Chief Analyst at Global Risk Management, said, “The war has now clearly entered a phase of direct attacks on energy infrastructure, marking a new escalation and suggesting that energy prices will face further upward pressure in the coming days.”

Research firm Wood Mackenzie noted that previous market expectations anticipated a short-term disruption to energy supply, with an orderly restart expected to restore pre-conflict levels by mid-2026. However, this outlook now appears increasingly unlikely.