IMF warns Gulf flows need more time

Energy and commodity prices have retreated after the US-Iran agreement to halt hostilities and reopen the Strait of Hormuz, but the International Monetary Fund has warned that Gulf trade and price stability will not return immediately.

IMF spokesperson Julie Kozack said in Washington that the Fund had observed a fall in energy, fertiliser and base metal prices after shipments from Gulf countries began to resume. The easing has reduced some pressure on the world economy after weeks of war-linked disruption, but shipping, insurance, inventory and security constraints are still weighing on the pace of normalisation.

The Fund is preparing to update its World Economic Outlook on July 8, when it will decide whether to retain the three growth scenarios it set out in April to account for different Iran war outcomes. Those scenarios were framed around the duration of conflict, the damage to energy infrastructure, the closure or reopening of Hormuz, and the second-round effects of higher oil and gas prices on inflation and financial conditions.

Kozack said the ceasefire and steps towards reopening the strait were welcome and, if sustained, would support global activity. But she cautioned that prices and flows would take time to settle because the disruption had affected not only crude oil and gas but also fertiliser, shipping schedules, risk premia and confidence across import-dependent economies.

The Strait of Hormuz remains central to the global energy system. Before the conflict, the waterway handled about a fifth of the world’s oil and seaborne liquefied natural gas flows. Its closure and the threat to tankers pushed oil above $100 a barrel at the height of the crisis, forced shippers to revise routes, lifted freight and insurance costs, and placed heavy strain on countries with limited fiscal space.

Brent crude has since fallen back towards the low $70s, close to levels seen before the sharp escalation, as more tankers moved out of the Gulf and traders priced in a lower immediate risk of supply loss. Market data showed a burst of delayed shipments leaving the region, including large volumes of crude that had been stranded or slowed by the security situation.

The price fall, however, does not amount to full recovery. Shipping through Hormuz is still being handled with caution, and some vessels continue to avoid riskier lanes. Insurers are also reassessing war-risk premiums, while refiners and commodity buyers are rebuilding depleted inventories. These factors mean the first wave of supply may create temporary softness in prices without guaranteeing stable flows in the weeks ahead.

The IMF’s April forecast placed global growth at 3.1 per cent in 2026 and 3.2 per cent in 2027 under a limited-conflict assumption, after lowering expectations because of the energy shock and heightened policy uncertainty. The Fund had warned that a longer war or sustained closure of Hormuz would deepen the blow to output and raise inflation, particularly for oil-importing economies in Africa and Asia.

The July update will therefore be closely watched by governments, central banks and commodity markets. A durable ceasefire could allow the IMF to move away from its more adverse assumptions, while renewed disruption would keep pressure on global inflation forecasts and complicate interest-rate decisions in major economies.

The Fund’s assessment comes as financial markets are trying to distinguish between a genuine easing of risk and a short-term adjustment after panic buying. Oil’s move lower has offered relief to consumers and businesses, but the underlying geopolitical risk has not disappeared. Any renewed attack on ships, port infrastructure or Gulf energy facilities could quickly restore the risk premium that lifted prices earlier in the conflict.

The impact remains uneven. Energy exporters face lower spot prices after the retreat, but they benefit from the restoration of export routes. Importers gain from cheaper crude and gas, yet many are still exposed to high freight rates, volatile currencies and food-price risks linked to fertiliser supply. Low-income economies with narrow fiscal buffers remain vulnerable even if benchmark prices continue to fall.