April 15, 2026 — 12:08pm
The International Monetary Fund has been doing what it usually does best: laying out bleak “what if” pathways. This time, the backdrop is the war on Iran, and what happens to global energy supplies and prices when—if—the conflict ends.
Misryoum newsroom reported that the IMF’s “reference” forecast assumes the war ends soon and its impact fades by mid-year. Under that scenario, growth slows from the IMF’s previous, pre-war forecast of 3.3 per cent (planned to be upgraded to 3.4 per cent) to 3.1 per cent, while global inflation rises from 3.8 per cent (forecast in January) to 4.4 per cent. Even that baseline is hardly comforting; it’s more like “less bad,” not “good.”
Then there are the adverse and severe cases, and they get sharp fast. In the “adverse” scenario—where oil and gas prices jump higher and stay higher—growth drops to 2.5 per cent and inflation climbs to 5.4 per cent. The “severe” scenario, which includes more damage to regional energy infrastructure, paints an even darker picture: growth could fall to 2 per cent this year, with inflation above 6 per cent by 2027.
The IMF’s big warning is basically this: the energy shock doesn’t politely wait for diplomacy. Even if the US and Israel’s war ends soon, the impact ranges from quite damaging to severely damaging. Misryoum analysis indicates that poorer countries, especially those dependent on imported energy—and Iran’s neighbours, inadvertently caught up in the conflict—would feel the squeeze first.
And it’s not only importers that are in trouble. Even energy exporters like Australia and the US aren’t immune, because higher global energy prices and supply shortages ripple outward anyway. The IMF would cut their expected growth rates and raise their expected inflation rates. The world, the logic goes, won’t allow itself to be that dependent on a volatile region again—especially with Iran able to shut down the strait at will.
There’s also a political mismatch here. While Donald Trump and his advisers appear to believe prices will return to “normal” once the Strait of Hormuz has been re-opened—by force or negotiation—that seems improbable. Misryoum editorial desk noted that past oil shocks don’t just fade overnight, and the memories and scars from earlier closures are still part of how energy-dependent economies price risk. The damage to infrastructure across the hub for more than 30 per cent of the world’s oil and gas—plus its role in fertilisers and their pre-cursors, petrochemicals, and aluminium—won’t be fixed quickly. In places like Qatar’s LNG facilities, some repairs could take years.
One small real-world detail that keeps coming to mind, honestly: the sound of diesel generators starting up in a crowded street when electricity hesitates—like a backup plan clicking in whether anyone asked for it or not. It’s that kind of “automatic response” the IMF scenario is hinting at: governments cap prices, subsidise gasoline and diesel, lower taxes, and scramble to secure supply. But the world was already loaded with debt before the war. Misryoum newsroom reported that most developed economies are running record levels of debt and deficits, and the war would push both higher—raising pressure on debt markets, lifting interest rates, and increasing debt-servicing costs. For governments that have been rolling maturing debt into ever shorter maturities to take advantage of lower rates, this gets ugly fast.
The longer story is also geopolitical and structural. A shift in oil demand and risk pricing is likely—a risk premium in oil and gas relative to what it would have been without the war. That would also mean higher insurance and shipping costs, making the region’s energy exports more expensive to move. Meanwhile, China—having built reserves of more than a billion barrels ahead of the crisis, with access to Russian oil and gas, and with the most electrified developed economy (plus dominance of many critical inputs for electrification)—could emerge stronger, potentially using increased trade through the strait to support internationalising the yuan.
And even if people want a clean ending—end the conflict, re-open the strait, return to normal—the IMF’s scenarios don’t really allow for that. Not fully. Not on the timescale that matters for household budgets, factory costs, and government balance sheets. The fallout might be slower than headlines, but it won’t be quiet, either. Actually, it might not be quiet at all—just delayed, and disguised as “temporary” until it isn’t.
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