In April 2026, the IMF cut its forecast for the world economy and warned that the Middle East conflict has broken the growth momentum seen at the start of the year. In its new reference forecast, global growth is expected to slow to 3.1% in 2026 and 3.2% in 2027. Global headline inflation is now projected to rise to 4.4% in 2026 before falling to 3.7% in 2027. The IMF also says that, without the war, it would have raised its 2026 growth forecast to 3.4%. That makes the message clear: the downgrade is mainly about war, energy, and uncertainty. (imf.org)
Why does oil matter so much? Because when conflict threatens shipping routes and energy facilities, oil prices can jump very quickly. Higher oil then spreads through the whole economy: transport becomes more expensive, factories face higher costs, fertilizer prices can rise, and food and daily goods often follow. The IMF’s reference forecast assumes a 19% increase in energy commodity prices in 2026. Since the IMF’s data cutoff was April 1, markets have offered an even newer warning sign: Brent crude settled at $95.48 early this week, rose to $101.91 the next day, and then settled at $105.07 after briefly moving above $107; earlier in the conflict, it had briefly topped $119. (imf.org)
For ordinary people, this is not just a story about traders or oil companies. It can mean more expensive gasoline, flights, shipping, and supermarket bills. In the United States, gasoline averaged $4.04 a gallon this week after reaching $4.16 earlier in the conflict, and analysts told Axios that prices may not return to pre-war levels until 2027 even if the Strait of Hormuz reopens smoothly. So the biggest lesson is simple: an oil shock does not stay in the oil market. It travels into family budgets and can force central banks to choose between fighting inflation and protecting growth. That is why the IMF is urging governments to give only targeted, temporary support instead of broad subsidies that could make inflation even harder to control. (axios.com)










