Fuel shortages likely ‘for some time’ due to Iran war, IMF warns
The International Monetary Fund (IMF) has warned that diesel and jet fuel shortages will continue “for some time” and the economic damage will be permanent even if the war ceasefire in Iran continues.
A fifth of total global oil usually passes through the Strait of Hormuz, but less than 10 percent of pre-war transit passes through it as the key shipping route for oil and gas is still effectively closed despite a ceasefire agreement being reached.
Prices have risen more than 40 percent since the start of the war, and the cost of Brent crude has risen several times, approaching $120 a barrel during the worst days of the conflict. It was at $97.60 on Friday morning, up 1.8 percent.
Kristalina Georgieva, managing director of the IMF, said that with the war not necessarily over and oil still not flowing freely, closing the Bosphorus “will continue to have ripple effects for some time.”
“Even in the best case scenario, there will be no neat and clean return to the previous status quo. The truth is that we really don’t know what the future holds for transits through the Strait of Hormuz.”
Refined petroleum products, diesel and jet fuel were used as references by Ms Georgieva, but she could not give a specific timetable for a return to normal as she warned of permanent economic damage around the world.
He said the IMF would have raised its global growth outlook for 2026 had the conflict not started, “but now even our most hopeful scenario involves a decline in growth”.
The IMF estimates it needs to distribute at least $20bn (£14.6bn) of emergency money to support war-affected countries; this figure is likely to rise to $50bn (£36.5bn). Food price increases and supply insecurity are another inevitable concern, Ms. Georgieva added.
While aviation fuel is a concern for the future, the AA this week gave support to British motorists by suggesting that petrol pump prices could start to fall within a fortnight, but only if current peace talks continue as planned.
However, oil prices have slowly risen again since the ceasefire was first announced, and there is no sign yet that significant amounts of oil are passing through the Bosphorus.
“Obviously there’s a lot to sort out. Most importantly, Iran maintains control of the Strait of Hormuz; reports suggest the passage remains effectively closed, with bulk carriers passing only dry cargo rather than oil,” said Richard Hunter, head of markets at Interactive Investor.
Last month the government urged drivers not to change their driving habits or unnecessarily panic and stock up on fuel after some initial reports that this was happening.
Last week, leading economic research firm Oxford Economics warned that fuel rationing could be on the agenda for the wider world if the situation in the Middle East continues.
Meanwhile, North Sea oil prices have risen to a new record high, another knock-on effect of wider market chaos. Forties Blend, the mark used for oil cargoes produced off the coast of Britain, rose to about $147 on Thursday evening, surpassing the previous high reached during the 2008 financial crisis, LSEG data showed.
