War could raise oil prices and reduce global GDP, says IMF

The war between Israel and the Hamas terrorist group in the Gaza Strip could cause oil prices to skyrocket, potentially having a negative impact on the global economy. The assessment was made by the chief economist of the International Monetary Fund (IMF), Pierre-Olivier Gourinchas.

According to the economist, a 10% increase in oil prices would be capable of reducing global Gross Domestic Product (GDP) growth by 0.15 percentage points, in addition to increasing inflation by 0.4%. Since the start of the conflict in the Gaza Strip, the price of a barrel of oil has increased by 4%.

“We have seen this in previous crises and conflicts. “It is clear that it reflects the potential risk that there may be disruptions in oil production or transportation in the region,” said Gourinchas, this Tuesday at a press conference, after the publication of the IMF report on the global economic outlook.

Despite the concerns, the IMF’s chief economist stated that any assessment of the consequences of the war between Israel and Hamas for the economy may be hasty at this time.

“I think we have to be cautious. It is still too early to really assess what the impact of the conflict could be,” she stated.

Despite the risks, the IMF’s official estimate, prepared even before the start of the conflict, indicates that the price of a barrel of oil could end this year at an average of US$80.5, with prospects of falling to US$72.7 until 2026.

Before the start of the conflicts in the Gaza Strip, the international price of raw materials was falling. At the end of September, a barrel of Brent reached US$97, but in the week between October 1 and 8 the price fell 11%.

The confrontation in the Middle East causes instability among the world’s largest oil producers. For Brazil, a substantial increase in the price of the product represents a threat to inflation, something that would have immediate repercussions on the rate of fall of the country’s basic interest rate, the Selic.