IMF, IEA and World Bank launch global ‘war room’ on Middle East crisis

The heads of the International Energy Agency (IEA), the International Monetary Fund (IMF) and the World Bank said on Wednesday they would form a joint coordination group to strengthen their response to the severe economic and energy fallout from the war in the Middle East, according to Reuters.

In a joint statement, the three institutions said the conflict had caused major disruption across the region and triggered one of the largest supply shortages in the history of global energy markets.

“At these times of high uncertainty, it is paramount that our institutions join forces to monitor developments, align analysis, and coordinate support to policymakers to navigate this crisis,” the heads of the IMF, IEA and World Bank said.

The new coordination group will assess the severity of the impact across countries, coordinate response mechanisms and mobilise stakeholders to provide support to countries in need.

They said the response could include targeted policy advice, assessments of potential financing needs and related financial support, including low- or zero-interest financing, as well as other risk-mitigation tools.

Thousands of people have been killed across the Middle East in the war, which began when the United States and Israel struck Iran on February 28, triggering Iranian attacks on Israel, US bases and Gulf states, while also opening a new front in Lebanon.

Now in its second month, the conflict has spread across the region, disrupting energy supplies and threatening to send the global economy into a tailspin.

“The impact is substantial, global, and highly asymmetric, disproportionately affecting energy importers, in particular low-income countries,” the three organisations said.

They added that the war was already pushing up oil, gas and fertiliser prices, while also fuelling concern over food prices and disrupting global supply chains for helium, phosphate, aluminium and other commodities. Tourism has also been affected.

“The resulting market volatility, weakening of currencies in emerging economies, and concerns about inflation expectations raise the prospect of tighter monetary stances and weaker growth,” the organisations said.

“We are committed to working together to safeguard global economic and financial stability, strengthen energy security, and support affected countries and people on their path to sustained recovery, growth, and job creation through reforms,” they added.