Commodities Buzz: Fuel and fertilizer prices may remain high for a prolonged period, note Heads of IEA, IMF, and World Bank Group

The Heads of the International Energy Agency, International Monetary Fund, and World Bank Group met yesterday as part of the coordination group they established in early April to maximize their institutions’ response to the energy and economic impacts of the war in the Middle East. At the end of their meeting, they noted that the impact of the war is substantial, global, and highly asymmetric, disproportionately affecting energy importers, in particular low-income countries. The shock has led to higher oil, gas and fertilizer prices, triggering concerns about food security and job losses as well. Some oil and gas producers in the Middle East have also seen a dramatic loss of export revenue.

The situation remains very uncertain, and shipping through the Strait of Hormuz is yet to normalize. Even after a resumption of regular shipping flows through the Strait, it will take time for global supplies of key commodities to move back towards their pre-conflict levels—and fuel and fertilizer prices may remain high for a prolonged period given the damage to infrastructure. Due to supply disruptions, shortages of key inputs are likely to have implications for energy, food, and other industries.

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