If the Iran war continues until next year, global economy will worsen... supply chain hit

Kristalina Georgieva, IMF Managing Director

The head of the International Monetary Fund (IMF) warned that if the US-Iran war continues until next year, some countries will fall into a deep recession and the entire world could be exposed to supply chain risks.

IMF Managing Director Kristalina Georgieva stated this on the 4th (local time) as a panelist at the economic and financial forum 'Milken Global Conference 2026' held at the Beverly Hilton Hotel in Los Angeles, California, USA.

Managing Director Georgieva pointed out, "If the (US-Iran war) continues until 2027 and oil prices remain around $125 per barrel, we should expect much worse outcomes. We will see prices skyrocket and supply chains will also be affected."

She continued, "Fertilizer prices have risen by 30-40% in a year, and now food prices will soon increase by 3-6%. 80% of the world consists of oil-importing countries, and among them are nations without fiscal capacity. While the US or China might be able to withstand it, a significant portion of the world will fall into a deep recession."

She asked, "Why should we worry about this?" and emphasized, "This is because it becomes a supply chain issue. If one part of the world stops functioning, everyone else feels it too."

Last month, the IMF released its World Economic Outlook, projecting that if the Middle East conflict was short-lived, global growth would only slow to 3.1%. However, it also stated that this forecast is no longer valid as the war has lasted longer than expected.

Managing Director Georgieva explained today, "The mild impact scenario is no longer valid. We anticipate this situation will continue throughout the year, and therefore we are assuming a negative scenario."

Mike Wirth, Chevron CEO

Mike Wirth, CEO of Chevron, the oil company also present, issued a serious warning regarding crude oil supply.

He stated that oil prices were able to remain around $115 per barrel even as the Iran war continued due to temporary buffering effects, which can no longer be expected.

CEO Wirth explained, "The main buffers that mitigate price shocks when crude oil supply is disrupted are onshore inventories, inventories on ships at sea, and strategic petroleum reserves. At the beginning of the (Iran) situation, strategic reserves were released, and commercial inventories at the start of the year were higher than usual, which helped absorb supply shocks."

However, he warned, "All of these are now depleted. The last ship from the Gulf is currently being unloaded today at the Port of Long Beach, California, USA," adding, "The buffers that prevented price signals from reaching the market are losing their capacity."

He added, "The best-case scenario (regarding the Strait of Hormuz) was already discarded weeks ago. It's time to seriously consider a long-term destructive scenario. Signs of (economic impact) are already visible in Asia, and Europe is following right behind."