New York: Kristalina Georgieva, Managing Director of the International Monetary Fund, cautioned that a prolonged war could drive oil prices to around $125 per barrel, intensifying inflationary pressures worldwide.

Speaking at a conference hosted by the Milken Institute in Washington, D.C., Georgieva said that sustained high oil prices and ongoing geopolitical tensions would lead to a rise in inflation, potentially destabilising global inflation expectations.

She noted that current conditions, including a drawn-out conflict, oil prices hovering at or above $100 per barrel, and mounting inflation, have already pushed the global economy into what the IMF terms a “negative scenario.”

In its April outlook, the IMF outlined three potential scenarios for global economic performance in 2026 and 2027. Under the baseline “Background Forecast,” which assumes a short-term conflict, global growth is projected at 3.1 percent, with inflation at 4.4 percent.

However, under the “Negative Scenario,” global growth is expected to slow to 2.5 percent in 2026, while inflation could rise to 5.4 percent.

Georgieva warned that the baseline scenario is becoming increasingly unlikely. “This scenario, with each passing day, is receding further and further into the rearview mirror,” she said.

In a worst-case “Severe Scenario,” the IMF projects global growth could fall to just 2 percent, while inflation could climb as high as 5.8 percent.