The International Monetary Fund (IMF), the World Bank, and the International Energy Agency (IEA) urged countries on Monday (the 13th) to avoid withholding energy supplies and imposing export controls that could exacerbate what they described as the greatest shock ever to the global energy market.
IEA Executive Director Fatih Birol told reporters after a meeting with IMF and World Bank officials that several countries are stockpiling reserves and imposing export restrictions, urging them to let energy stocks flow to the markets. He did not identify the countries in question.
“Don’t make things worse,” urged International Monetary Fund Managing Director Kristalina Georgieva, noting that she had met with hard-hit countries in Asia, sub-Saharan Africa, and some South Pacific islands that are concerned about supply.
“The first principle must be: do not impose export restrictions, which only exacerbate the imbalance,” she said, adding that the war will have a more severe impact on growth and inflation if it drags on.
On Monday, U.S. military forces began blocking ships leaving Iranian ports, and Tehran threatened to retaliate against ports in its Gulf neighbors following the failure of weekend negotiations in Islamabad aimed at ending the war. Oil prices have once again surpassed $100 per barrel, with no signs of a rapid reopening of the Strait of Hormuz, through which 20% of the world’s oil and liquefied natural gas passes.
Birol had previously stated at an Atlantic Council event that the conflict had triggered the worst global energy disruption ever, with more than 80 oil and gas facilities in the Middle East already damaged. He said the situation was already serious in March, when some shipments were made, but could worsen in April.
“The scale of the problem is enormous, and countries will suffer from this—some more than others—but I can say… no country is immune,” he said.
The leaders of the three institutions pledged to continue coordinating their responses to the conflict in the Middle East, which has driven oil prices up by 50% since it began on February 28. The shock has also driven up gas and fertilizer prices, raising concerns about food security and job losses.
Growth and inflation forecasts
The statement notes that the situation remains highly uncertain and that, even after regular shipping through the Strait of Hormuz resumes, it will take time for the global supply of essential raw materials to return to pre-conflict levels.
The IMF and the World Bank have indicated that they will likely revise their growth forecasts downward and raise their inflation forecasts due to the war.
The International Monetary Fund will release new forecasts on April 14, and the IEA is expected to publish a new monthly report on the oil market. The war has cast a shadow over the IMF and World Bank Spring Meetings, which are taking place this week in Washington.
Birol stated that the International Energy Agency has already released about 400 million barrels of oil from its reserves and is prepared to take further action if additional releases are deemed necessary.
“The 400 million barrels represent only 20% of our reserves. We still have 80% in reserve,” he said. “We are assessing the situation, and if and when we decide the time is right, we are ready to act immediately.”
Source: Reuters
