International oil prices are "riding a roller coaster"? IMF Chief: Every 10% increase leads to a 40 basis point rise in global inflation!

Caixin News, March 9 (Editor: Huang Junzhi) The International Monetary Fund (IMF) Chief Kristalina Georgieva warned on Monday that conflicts in the Middle East could push up global inflation, with energy security becoming a top concern.

She pointed out that if the situation in the Middle East persists, it will significantly impact market sentiment, economic growth, and inflation. We are in a world full of uncertainties, which has become the new normal.

Specifically, Georgieva warned that if oil prices continue to rise and maintain an upward trend throughout the year, a 10% increase in oil prices could lead to a 40 basis point rise in global inflation.

As the Strait of Hormuz remains blocked, major Middle Eastern oil producers like Iraq and Qatar announced production cuts. International oil prices not only broke through the $100 mark but even approached $120 at one point. However, at the time of writing, Brent crude futures fell below $108 per barrel, with the intraday gain narrowing to 16%; WTI crude futures also fell below $105 per barrel, with the intraday gain narrowing to 15%.

Earlier, media reports citing sources said that G7 finance ministers would hold an emergency conference call on Monday (8:30 a.m. New York time) with Fatih Birol, Director of the International Energy Agency (IEA), to discuss jointly releasing strategic oil reserves. Reports indicated that three G7 members, including the United States, have expressed support for this plan. Some U.S. officials believe that releasing 300 to 400 million barrels of reserves—about 25% to 30% of the total 1.2 billion barrels held by IEA member countries—would be an appropriate scale.

On Monday, Georgieva said at a seminar hosted by Japan’s Ministry of Finance, “We see that new conflicts in the Middle East once again test our resilience.”

She advised policymakers to imagine unimaginable scenarios and prepare for them in this new global environment. Georgieva also added that ongoing conflicts will continue to affect market sentiment, and countries need to strengthen their risk response capabilities.

In fact, since the outbreak of the U.S.-Iran conflict, Georgieva has issued warnings more than once. Last Thursday, she warned that the world is entering an era of more frequent and unpredictable shocks, with the Middle East war being the latest example. She also called on policymakers worldwide to prepare for potential challenges, which are not only political but also include disruptive technologies and trade conflicts.

Last Friday, Georgieva stated that if international oil prices rise by 10% and sustain that increase for a year, it would push global inflation up by 40 basis points and slow economic growth by 0.1 to 0.2 percentage points. It is evident that her wording has slightly changed, indicating that she now considers the situation to be more severe.