When oil jumps above $100 a barrel, it does not stay on trading screens. It hits the gas pump, airline tickets, and that monthly electric bill that already stings when the weather turns extreme.
The IMF is warning that the Iran war’s disruption to energy supply routes could lift inflation and lower growth worldwide, with knock on effects that reach food systems and the environment. By the Fund’s own “broad rule of thumb,” every sustained 10% rise in oil prices can add about 40 basis points to global headline inflation and cut global output by roughly 0.1% to 0.2%.
The IMF’s message, stripped of jargon
In its March 19 press briefing, IMF spokesperson Julie Kozack said oil and gas prices have risen more than 50% over the last month, pushing Brent above $100 a barrel.
She said the Fund has not received formal requests for emergency financing, but it stands ready to support member countries as they reassess policy options. The IMF plans to include the conflict’s impact in its World Economic Outlook update during the Spring Meetings in April.
Kozack also said fertilizer shipments have been disrupted and that transportation problems raise the risk of food price increases, which “could be substantial” depending on how long the conflict lasts.
Her advice to central banks was to remain “vigilant,” watching for “second round effects” and whether inflation expectations stay “well anchored.” She noted markets have already reacted, with equity markets down and bond spreads rising in some Gulf countries.
The Strait of Hormuz is an ecological pressure point too
Kozack said the closure of the Strait of Hormuz has cut off access to roughly 20% of the world’s oil and seaborne LNG supplies, and she said damage to energy infrastructure in the Gulf region and Iran has disrupted oil and gas production.
The IEA calls Hormuz one of the world’s most critical oil chokepoints, noting that an average of about 20 million barrels per day of crude and oil products shipped through it in 2025 and that roughly 25% of global seaborne oil trade transits the strait.
TheEIA has also estimated that about 20% of global LNG trade went through Hormuz in 2024, largely from Qatar.
Energy chokepoints are usually discussed as a military problem, but they are also an environmental one.
Longer routes typically mean more fuel burned just to deliver the same cargo, and local pollution can get worse around ports and highways. So what happens to climate promises when the priority becomes keeping the lights on tonight?
More pipelines can soften the blow, but they lock in hard choices
With Hormuz effectively blocked, Gulf exporters have been leaning on pipelines that bypass the strait. Reuters reported that flows through Saudi Arabia’s East West pipeline surged from an average of 1.7 million barrels per day in 2025 to a record daily export of 5.9 million barrels per day on March 9, with the line expected to reach its 7 million barrel per day capacity soon.
That engineering sprint helps keep fuel flowing, but it also highlights the tradeoff for climate policy makers. The faster the world builds and protects fossil corridors, the harder it can be to pivot budgets toward clean power, efficiency, and electrification when the crisis fades.
Fertilizer shocks can turn into land and water stress
The IMF briefing put fertilizer in the same basket as oil and gas, which is telling. When fertilizer supply is disrupted and prices climb, it can push food costs higher and squeeze farmers at the exact moment many regions are coping with droughts, floods, and heat.
There is no single outcome, and experts usually avoid absolutes here. Some producers may cut back on inputs and risk lower yields, while others may shift crops or expand acreage, and those choices can shape runoff, soil health, and habitat pressure for years.
The tech and defense bets that could outlast this crisis
The IMF’s warning is not only about barrels and balance sheets, it is also about resilience. Governments trying to stabilize energy markets will likely lean on defense and maritime security efforts, while companies look for ways to reduce exposure to sudden supply shocks.
That can mean more investment in grid flexibility software, storage, and microgrids that keep hospitals and water systems running even when fuel deliveries stumble.
It can also mean sharper monitoring of pipelines and shipping routes, because in a world of drones and cyber risk, energy infrastructure is no longer “just” infrastructure.
The official transcript was published on International Monetary Fund.
