International Monetary Fund (IMF) Managing Director Kristalina Georgieva, on Monday, March 9, cautioned that the continuous high oil prices triggered by the Iran-Israel-US war could create renewed pressure on inflation worldwide. Speaking during a symposium organised by Japan’s finance ministry, Georgieva said the unfolding situation in the region is putting the resilience of the global economy to the test at a time when many countries are still navigating fragile recoveries from economic uncertainties.

“We are seeing resilience tested again by the new conflict in the Middle East," Georgieva said, according to a Reuters report.

Rising Oil Prices Could Rekindle Inflation

Georgieva highlighted that sustained increases in energy costs could complicate the global fight against inflation. Oil markets are particularly sensitive to disruptions in the Middle East, which remains a critical hub for global energy supply.

She explained that if oil prices climb significantly and remain elevated for a long period, inflationary pressures could intensify across economies. According to her, a lasting 10 per cent increase in crude prices through most of the year could lift global inflation by roughly 40 basis points.

“My advice to policymakers in this new global environment is to think of the unthinkable and prepare for it," she said.

Her remarks come amid escalating tensions involving Iran, the United States and Israel, which have major concerns about disruptions to major oil supply routes and broader instability in energy markets.

India Flags Risks From Prolonged Crisis

India’s Finance Ministry has also warned that an extended conflict in the Middle East could ripple through the global economy and affect domestic financial conditions. The ministry’s Monthly Economic Review for February noted that shipping through the Strait of Hormuz, one of the most important global oil transit routes, has already faced disruptions. The narrow passage accounts for nearly 20 per cent of worldwide crude oil shipments.

The report added that the US-Israel strikes on Iran on February 28, which killed Iranian Supreme Leader Ali Khamenei and provoked retaliatory threats, marked a significant escalation with potential long-term consequences for global energy dynamics.

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