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IMF Warns High Energy Prices Could Persist Into 2027
The IMF says energy could stay expensive for a long time, possibly into 2027.
Oil is still around $100 a barrel.
There is not enough refining capacity to turn crude oil into products such as diesel, which has pushed prices for those products up.
Natural gas shipments from the Gulf are also difficult because routes through the Strait of Hormuz are threatened.
Asia and Europe are especially affected.
When energy costs rise, it can also make food and other goods more expensive.
That can make inflation worse and slow the world's economy.
Colder weather and countries refilling their reserves could add to demand.
The IMF says prices may not quickly fall even if the war ends soon.
The IMF says oil prices remain around $100 a barrel amid risks, transport costs and disrupted supply.
A global shortage of refining capacity has pushed the gap between crude and refined-product prices to about $100 a barrel.
Restricted LNG transport through the Strait of Hormuz is impairing Gulf natural gas supplies, with Asia and Europe particularly affected.
The IMF warns that higher energy costs could raise inflation and weaken growth, while colder weather and reserve replenishment may add pressure.
Managing Director Kristalina Georgieva said prices could remain high even if the Gulf war ends soon, and Brent futures indicate elevated prices through 2027.
- Who
- The International Monetary Fund and its Managing Director, Kristalina Georgieva.
- What
- The IMF warned that high energy prices and supply constraints could persist, with oil prices potentially remaining elevated into 2027.
- Where
- Georgieva spoke in Singapore; the supply disruption concerns energy flows from the Gulf and shipping through the Strait of Hormuz.
- When
- Georgieva made the warning Wednesday; she said price pressures could build as the Northern Hemisphere cold season approaches.
- Why
- Risks to Gulf supply, high transport costs, limited refining capacity and restricted LNG transport are keeping energy supplies tight.
Key facts
- Oil price
- Around $100 per barrel, according to Georgieva.
- Refining constraint
- A structural global shortage of refining capacity.
- Crack spread
- About $100 a barrel, according to Georgieva.
- Natural gas
- Gulf supplies remain severely impaired, with LNG transport options limited.
- Most affected regions
- Asia and Europe.
- Price outlook
- Brent futures point to high oil prices through 2027.
- Other economic pressures
- The IMF also cited rapid AI expansion and record public debt as forces shaping the world economy.
Quotes
Kristalina Georgieva
Managing Director of the International Monetary Fund
“Nonetheless, despite a shaky recovery of flows out of the Gulf, oil prices remain around $100 per barrel reflecting risks, high transport costs, and other factors.”
thehansindia.com
“Even if the war in the Gulf were to end soon, the problem of high energy prices would likely persist for some time.”
thehansindia.com
Sources
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