US Airstrikes on Iran Prompt IMF Warning of Global Economic Risks Amid Strait of Hormuz Tensions

Kristalina Georgieva, the head of the International Monetary Fund, has warned that recent U.S. airstrikes on Iranian nuclear sites could severely impact global economic growth. Her warning comes amid concerns that Iran might make good on its threat to close the strategic Strait of Hormuz.

In an interview with Bloomberg TV, Georgieva emphasized that the IMF is closely watching oil prices as tensions in the Middle East rise. She highlighted the potential for widespread economic repercussions if energy markets become unstable. “There could be secondary and tertiary impacts,” Georgieva stated. “If turbulence affects growth in major economies, it could result in downward adjustments to global growth forecasts.”

The Iranian parliament voted over the weekend to shut the Strait of Hormuz, a vital shipping route through which nearly 20% of the world’s oil is transported. This strait connects the Persian Gulf with the Gulf of Oman and the Arabian Sea, making it crucial to global energy security.

This development follows the U.S. military's Operation Midnight Hammer, a campaign involving precise airstrikes on three Iranian nuclear facilities. The energy markets reacted sharply, with oil prices surging by more than 5% on Sunday, reaching a five-month high of $81.40 per barrel, before slightly stabilizing. Brent crude increased again on Monday morning to $77.94 per barrel, marking a 1.2% rise.

Goldman Sachs has projected that if oil flow through the Strait of Hormuz is reduced by half for a month and continues to be down by 10% over the subsequent 11 months, global oil prices could soar to $110 per barrel.

The U.S. Secretary of State Marco Rubio cautioned Tehran against closing the strait, describing it as “economic suicide.” He urged China, a major customer of Iranian oil, to engage diplomatically. “I encourage the Chinese government in Beijing to call them about that, because they heavily depend on the Strait of Hormuz for their oil,” Rubio stated on Fox News.

Despite these threats, analysts are divided on the probability of a complete disruption. Holger Schmieding, chief economist at Berenberg Bank, characterized the Strait of Hormuz as “the key economic risk to watch,” yet he considered a full shutdown a highly unlikely and risky move for Iran.

Brokerage RBC Capital Markets recognized a “clear and present risk of energy attacks,” possibly from Iranian-backed militias in Iraq. However, they noted it could take days or weeks to observe the full scope of Tehran's response.

According to Bloomberg's vessel tracking data, two supertankers, the Coswisdom Lake and South Loyalty, reversed their plans to transit the strait on Sunday, opting instead to head south. This move underscores the heightened anxiety within the shipping industry.

While uncertainty persists, experts caution against assuming the worst is over. Analysts at RBC suggested, “We may be in the Rumsfeld ‘unknown knowns’ matrix in this nine-day Middle East military conflict,” indicating that a broader escalation might still be possible.