International Monetary Fund (IMF) Managing Director Kristalina Georgieva has warned that US attacks on Iran could harm global economic growth.
Stressing that the IMF is closely monitoring energy prices, Georgieva drew attention to the fact that the increase in oil prices in particular could spread in waves throughout the global economy and added:
“There could also be secondary and tertiary effects. Let’s say there is more turbulence that hits the growth prospects of major economies – then that would have the effect of triggering downward revisions to global growth expectations.”
Meanwhile, Iran’s parliament voted to close the vital shipping channel in the Strait of Hormuz over the weekend in retaliation for US President Donald Trump’s attack on the country. A fifth of the world’s oil consumption passes through the Strait of Hormuz, which connects the Persian Gulf to the Gulf of Oman and the Oman Sea beyond.
According to experts, if the Strait of Hormuz is closed, it could create an oil supply shock that would raise energy prices, increase inflation and negatively impact economic growth.
Oil prices rose more than 5 percent to a five-month high of $81,40 a barrel late Sunday, but then fell slightly. Brent crude rose 1,2 percent to $77,94 a barrel on Monday morning.
If oil flows through the critical waterway were to be cut in half for a month and then remain 11 percent lower for 10 months, the price could reach $110 a barrel, according to new estimates from international investment bank Goldman Sachs.
US Secretary of State Marco Rubio warned on Fox News that Iran closing the strait would be “economic suicide” and said China should influence Tehran on the issue, adding: “I encourage the Chinese government in Beijing to call them on this issue because they get a large part of their oil needs from the Strait of Hormuz.”
