Rising Oil Prices Threaten Global Inflation: Warning from the International Monetary Fund
Kristalina Georgieva warned today, Monday, that any rise in oil prices will double inflationary pressures on the global economy, emphasizing that a 10% increase in crude prices, if sustained for most of the year, could raise global inflation by 40 basis points.
Georgieva, who delivered her speech at a seminar organized by the Japanese Ministry of Finance, said:
"We see the resilience of the global economy being tested again due to the new conflict in the Middle East."
She firmly added: "My advice to policymakers in this new global reality is: think about what seems unimaginable and prepare for it."
She pointed out the importance of countries maintaining financial flexibility to face shocks, asserting that the independence of central banks and effective fiscal policy frameworks enhance economic growth despite the prevailing uncertainty in the world, which has become the new normal.
Amid rising tensions in the Middle East, the price of oil today surpassed $115 per barrel for the first time since 2022, amid fears that the U.S.-Israeli war on Iran will affect oil production and shipping operations in the region.
Brent crude, the global benchmark for prices, rose by more than 23% compared to Friday's close at $92.69, while West Texas Intermediate crude jumped about 25% from the previous closing price of $90.90, according to the Associated Press.
This increase comes at a time when fears are rising that the conflict in the Middle East could disrupt the flow of vital oil supplies, adding further pressure on global economies.
