The International Monetary Fund (IMF) has warned that the US-Israel war with Iran could trigger an energy crisis of unprecedented scale, which may push the global economy toward recession.
In its latest World Economic Outlook, the IMF said closure of the Strait of Hormuz or damage to key energy infrastructure could severely disrupt global oil and gas supplies.
The report outlines different possible outcomes. In a best-case scenario, if the war ends soon and energy markets stabilise by mid-year, global growth would still slow slightly to about 3.1% in 2026, with inflation remaining high.
In worse scenarios, the impact becomes much more serious. If oil prices stay around 100 US Dollars per barrel, global growth could fall to 2.5 per cent.
In a severe case, where oil rises to 110 US Dollars per barrel this year and 125 US Dollars per barrel next year, global growth could drop to 2%, close to a global recession, while inflation would climb to nearly 6%.
IMF chief economist Pierre-Olivier Gourinchas said the world economy is facing another major shock, especially if the conflict continues.
The IMF also warned governments against large, unplanned spending responses, saying support should be temporary and targeted because inflation remains high and public debt is already elevated.