Canadian Finance Minister François-Philippe Champagne warned that geographic and human factors will keep global energy markets vulnerable long after any Iran conflict ends, even as policymakers grapple with immediate supply-chain shocks.
Speaking at IMF-World Bank meetings in Washington, Champagne said the Strait of Hormuz disruption has exposed extreme fragility in global energy and food systems, with Iraq’s oil production halted and Bangladesh cut off from cooking gas supplies. He noted that Pacific Island nations face acute risks due to limited storage and reliance on distant tanker deliveries.
IMF Managing Director Kristalina Georgieva described the situation as a “slower moving shock,” warning that April would likely be tougher than March as tankers departing before late February reach destinations without replacement shipments. She emphasized that a tanker’s 40-day transit time to places like Fiji creates a dangerous lag in supply response.
World Bank President Ajay Banga highlighted the disproportionate impact on poorer nations, noting that Iraq normally derives 85% of its revenues from oil now halted, and stressed that fertilizer shortages could trigger a food crisis by June or July when planting begins in non-northern countries. The World Bank has prepared up to $100 billion (£74 billion) in support funds—exceeding Covid-era allocations—to aid vulnerable economies manage rising energy and food costs.
ING’s analysis projects oil prices averaging $96 per barrel through the second quarter as energy flows gradually recover but remain below pre-war levels through year-end. The firm anticipates a single ECB rate hike in June amid 4% headline inflation, followed by two later cuts, while expecting no Bank of England action due to weak jobs data and restrictive policy.
CNBC’s interviews with over 30 policymakers revealed widespread concern about prolonged uncertainty. Pierre Gramegna of the European Stability Mechanism said inflation impacts are already visible at gas stations worldwide, quoting Gabriel García Márquez to note that ending war requires multilateral agreement unlike starting one. Bank of France Governor François Villeroy de Galhau warned against betting only on favorable outcomes, citing unprecedented unknowns that could drive higher inflation and lower growth through secondary effects beyond energy.
Swedish Finance Minister Elisabeth Svantesson added that the full scope of the crisis remains unseen, stressing that war intensity and duration will determine global demand and growth outcomes, with everyone affected in some way.
How long might energy supply disruptions last after fighting stops?
Due to tanker transit times, disruptions could persist for weeks or months after any ceasefire, as vessels already en route deliver their cargoes before new shipments can arrive.
Why are poorer countries particularly vulnerable to this crisis?
Many rely heavily on imported oil for revenue and cooking gas, while facing imminent fertilizer shortages that could disrupt planting seasons and trigger food insecurity by mid-2026.
What policy responses are central banks considering?
The ECB may hike rates in June to combat inflation, while the Fed is expected to cut rates twice later in the year, and the Bank of England is likely to hold steady due to weak labor markets.
