TEHRAN- After the US and Israel attacked on February 28, Iran effectively closed the Strait of Hormuz, sending the price of crude oil and liquefied natural gas sharply higher.

The international Brent crude benchmark settled near $110 on Monday, with cash benchmarks sourced to the West Asia at a substantial premium to that price.

The war in the West Asia will lead to higher inflation and slower global growth, the head of the International Monetary Fund told Reuters on Monday, ahead of a forecast for the world economy planned by the global lender for next week.

The war has triggered the worst-ever disruption in global energy supply, with millions of barrels of oil production shuttered due to Iran's effective blockage of the Strait of Hormuz, crucial for shipping one-fifth of the world's oil and gas. Even if the conflict is swiftly resolved, the IMF is set to reduce its forecast for economic growth and bump up its outlook for inflation, Kristalina Georgieva, managing director of the IMF, said.

"We are in a world of elevated uncertainty," the IMF chief said, citing geopolitical tensions, technological advancements, climate shocks and demographic shifts. "All of this means that after we recover from this shock, we need to keep our eyes open for the next one."

The war has shrunk global oil supply by 13%, Georgieva said, with the impact rippling through oil and gas shipments and into related supply chains such as helium and fertilizers.

Even a rapid end to hostilities and a fairly rapid recovery will result in a "relatively small" downward revision of the growth forecast and an upward revision of its inflation forecast, she said. If the war is protracted, the effect on inflation and growth will be greater.

Poor, vulnerable countries with no energy reserves will be hardest hit, Georgieva added, noting that many countries had little to no fiscal space to help their populations weather the price increases caused by the war, which in turn also increased the prospects of social unrest.

Broad energy subsidies were not the answer, she said, urging policymakers to avoid government payments that could further inflame inflationary pressures.

"Even if the war is to stop today, there would be a lingering negative impact to the rest of the world," she said.

The heads of the IMF, IEA and World Bank said last week they would form a coordinated effort to assess the energy and economic effects of the war.

Georgieva said the IMF was also engaging with the United Nations' World Food Program and Food and Agriculture Organization on food security.

The World Food Program said in mid-March that millions of people will face acute hunger if the war continues into June. Georgieva said the IMF did not see a food crisis yet, but that could happen if the delivery of fertilizers was impaired.

Without steady fertilizer supplies, crop yields would drop sharply in the coming seasons, driving up food prices worldwide. Developing nations that rely on grain imports are especially vulnerable, as they already face high debt and weak currencies. The IMF, IEA and World Bank plan to release a joint assessment within weeks, aiming to identify the most exposed regions and propose emergency measures.

These could include targeted food aid, fertilizer distribution corridors, and temporary waivers on agricultural trade barriers. Officials stress that early coordination is key to preventing a full-blown hunger catastrophe. “We have a narrow window to act before planting cycles are disrupted,” a World Bank spokesperson said. The three institutions have also invited agriculture ministers from G7 nations to a special session on fertilizer access next month.