Washington, Oct 13: The International Monetary Fund on Tuesday assumed oil prices will average $95.74 a barrel this year, up from $67.74 in 2025, and warned that energy-importing countries with little stake in the technology boom face “the most difficult configuration.”
In its October 2026 World Economic Outlook, the IMF said the assumed price, based on futures markets, eases to $87.39 a barrel in 2027. The benchmark is a simple average of Brent, Dubai Fateh and West Texas Intermediate crude. The report said this “corresponds to an increase of 41 per cent in crude oil prices and 48 per cent in natural gas prices in 2026 relative to those in 2025.”
Natural gas prices are projected at $20 per million British thermal units, about 36 per cent above the April reference price. Fertiliser prices are projected to rise 10 per cent in 2026, and food prices are expected to increase 5 per cent, “reflecting higher energy and fertilizer costs and more expensive transport and insurance.”
Global headline inflation is projected to rise to 4.7 per cent in 2026 before easing to 4.1 per cent in 2027, “marking a cumulative upward revision of 0.7 percentage point with the temporary increase driven mainly by energy and food prices,” the WEO said. The Fund said the impact could have been far worse.
Without flexible supply responses, it said, the loss in oil supply from the Hormuz closure “would have increased oil prices to an average of about $110 a barrel for the year, reducing global growth in 2026 by 0.9 percentage point.” Rerouted Gulf production, higher output elsewhere and inventory drawdowns lowered the implied price to about $85 a barrel.
With the 20 per cent fall in the oil intensity of world GDP since the mid-2010s, the IMF put the net toll on global growth at 0.3 percentage point. “Over the past two decades, energy usage per dollar of global GDP has fallen by 32 percent,” the report said. Renewables accounted for 60 per cent of the increase in electricity production since 2010.
The burden is not evenly shared. “Energy exporters outside the immediate conflict zone benefit from favorable terms of trade,” the WEO said. “Conversely, energy-importing economies with little connection to the technology value chain face the most difficult configuration: higher import costs and exchange rate pressures, weaker real incomes, more constrained fiscal space, and fewer offsetting demand impulses,” it said.
India, a large energy importer, has so far held up. The WEO said “India’s growth remained robust, underpinned by domestic demand and services, despite higher oil prices.” The Fund projected Indian consumer prices to rise 5.0 per cent in 2026, up from 2.0 per cent in 2025, before easing to 4.4 per cent in 2027.
The IMF said risks were “skewed to the downside.” It warned that “a prolonged stalemate or further escalation in the Middle East could keep energy and food prices elevated and volatile, revive inflationary pressures, worsen fiscal and external balances, and weigh on growth.” It said backwardation in oil markets “still suggests that markets continue to treat the supply disruptions as largely temporary,” but that if tensions persisted, expectations “could shift toward the shock being more persistent.”
“These risks would be particularly challenging for energy-importing countries and especially emerging market and developing economies with limited fiscal space and external buffers,” the WEO said, adding that higher commodity prices “could widen current account deficits, increase external financing needs, and intensify exchange rate pressures.”
IMF Chief Economist Silvana Tenreyro, in a blog accompanying the report, said “the oil disruption alone would have significantly reduced global growth in 2026” without the margins of adjustment. She warned that “dwindling energy inventories could allow geopolitical shocks to transmit even more forcefully to energy prices.”
IANS