WASHINGTON: The International Monetary Fund (IMF) has warned that a prolonged conflict involving Iran could significantly disrupt global markets, particularly if the situation continues through 2027 and oil prices surge to as high as $125 per barrel.
According to the Fund, such a scenario would place additional pressure on already fragile global economic conditions, increasing inflationary risks and slowing down growth across both advanced and emerging economies.
IMF Managing Director Kristalina Georgieva stated that the institution’s earlier projections did not fully account for the evolving geopolitical developments in the Middle East. She noted that recent tensions have changed the risk outlook for global economic stability.
Georgieva explained that the IMF had previously anticipated that a potential US-Israel conflict involving Iran would likely result in a moderate slowdown in global growth, accompanied by a limited rise in inflation. However, she cautioned that prolonged instability could amplify those effects far beyond earlier expectations.
The IMF has now revised its risk assessment framework, warning that sustained conflict through 2027, combined with elevated crude oil prices, could trigger stronger inflationary pressures, disrupt supply chains, and weigh heavily on global trade and investment flows.
Economists associated with the Fund say that oil price spikes remain one of the most sensitive channels through which geopolitical shocks impact the world economy, given the sector’s influence on transport, manufacturing, and energy costs.
The IMF emphasized that the global economy is currently in a “precarious balancing phase,” where even small disruptions in major energy-producing regions could have outsized effects on recovery momentum.
