Prolonged energy price surge could fuel inflation – IMF

The International Monetary Fund (IMF) has warned that sustained increases in energy prices could drive inflation higher and slow global economic growth. Speaking on Thursday, IMF spokesperson Julie Kozack said the ongoing conflict in the Middle East has already disrupted seaborne shipments of oil and natural gas, pushing crude prices up by more than 50 […]

The International Monetary Fund (IMF) has warned that sustained increases in energy prices could drive inflation higher and slow global economic growth.

Speaking on Thursday, IMF spokesperson Julie Kozack said the ongoing conflict in the Middle East has already disrupted seaborne shipments of oil and natural gas, pushing crude prices up by more than 50 per cent to above $100 per barrel, according to Reuters.

She was quoted as saying the economic impact of the crisis will depend largely on its duration, intensity, and how far it spreads.

Kozack cited an IMF “rule of thumb,” noting that every 10 per cent increase in energy prices sustained over a year could raise global inflation by about 40 basis points, while reducing economic output by between 0.1 and 0.2 per cent.

She warned that if oil prices remain above $100 per barrel for a prolonged period, the effects on inflation and growth could be significant.

The IMF spokesperson said the Fund had not received any formal requests for emergency financing but remains ready to support member countries if needed. She added that IMF officials are actively engaging with finance ministers, central bank governors, and regional institutions to monitor developments.

Kozack also urged central banks to remain vigilant, particularly in assessing whether rising energy costs are feeding into broader inflation and whether inflation expectations remain stable.

On regional impacts, she noted that growth in Gulf Cooperation Council countries could weaken, depending on their ability to sustain oil and gas exports amid the disruption.

The IMF had earlier expressed concern over rising energy prices and trade disruptions at the onset of the crisis, describing the situation as highly fluid and a source of increased uncertainty for the global economy.

The conflict, which escalated in late February following military strikes involving the United States, Israel, and Iran, has heightened risks to global crude supply and intensified volatility in the energy market.

The IMF is expected to incorporate the implications of the crisis into its updated global economic outlook scheduled for release in April during the IMF-World Bank Spring Meetings.

Daily Trust reports that crude oil prices have continued to surge since the outbreak of the Middle East crisis.

Brent Crude yesterday crossed the $115 per barrel mark before it stabilised to $108 as of the time of filing this report. There are fears the war might push the price to $200 except a ceasefire agreement was reached.