IMF Warns Iran War Could Raise Global Inflation

The International Monetary Fund (IMF) said it is closely monitoring the impacts of the war in Iran on global economies. So far, no country has requested emergency financial assistance related to the conflict.

IMF spokesperson Julie Kozack said prolonged higher energy prices could raise global headline inflation. She warned that oil prices above $100 could worsen economic conditions.

Kozack explained that if prices stay above $100 for a year or more, global inflation could rise up to two percentage points. Global output could also drop by one percentage point, based on IMF estimates.

The US and Israel launched strikes on Iran on February 28, escalating tensions across the Middle East. Iran has effectively blockaded the critical Strait of Hormuz waterway, through which about 20 percent of global oil and natural gas flows.

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Energy prices have surged since the conflict began. Brent crude recently traded around $110 per barrel, up 52 percent from pre-war levels, highlighting risks for global markets.

Kozack noted that economically vulnerable countries would face the most immediate impacts. Limited policy space and financial buffers make them particularly susceptible to rising energy and commodity prices.

She also highlighted disruptions to food and fertilizer shipments. These, along with transport delays, could raise global food prices significantly depending on the duration and intensity of the conflict.