IMF, World Bank, IEA urge countries to stop hoarding energy supplies, imposing export controls

WASHINGTON – The International Monetary Fund (IMF), World Bank and International Energy Agency (IEA) on April 13 urged countries to avoid hoarding energy supplies and imposing export controls that could worsen what they called the biggest shock ever to the global energy market.

IEA chief Fatih Birol told reporters after meeting IMF and World Bank leaders that several countries were holding on to stocks and imposing export restrictions, and appealed to all countries to let energy stocks flow to the markets. He did not name the countries.

“Do no harm,” said IMF managing director Kristalina Georgieva, noting that she was meeting countries that were being hit hard in Asia and sub-Saharan Africa and some South Pacific islands that were worried about supplies.

“The first principle should be: don’t impose export restrictions that are only making the disequilibrium worse,” she said, adding that the war would have a more severe impact on growth and inflation if it continued for a prolonged period.

The US military on April 13 began a blockade of ships leaving Iran’s ports, and Tehran threatened to retaliate against its Gulf neighbours’ ports after weekend talks in Islamabad on ending the war broke down. Oil prices jumped back over US$100 per barrel, with no sign of a swift reopening of the Strait of Hormuz, which normally carries 20 per cent of the world’s oil and liquefied natural gas.

Mr Birol told an Atlantic Council event earlier that the conflict had triggered the worst global energy disruption ever, with more than 80 oil and gas facilities across the Middle East damaged to date. He said the situation was bad in March, when some cargoes had been loaded, but it could worsen in April.

“The scale of the problem is huge, and countries will suffer under this, some more than others, but I can tell you... no country is immune,” he said.

The leaders of the three institutions vowed to keep coordinating their responses to the conflict in the Middle East, which has sent oil prices up by 50 per cent since it began on Feb 28. The shock has also driven up gas and fertiliser prices, triggering concerns about food security and job losses.

“We recognise that when we act together, the impact of our action is higher. We are more efficient, we help the membership the most,” Dr Georgieva said.

Growth and inflation forecasts

The statement noted that the situation remained very uncertain, and even after a resumption of regular shipping through the Strait of Hormuz, it would take time for global supplies of key commodities to return to pre-conflict levels.

The IMF and World Bank have said they expect to downgrade their growth forecasts and lift their inflation numbers as a result of the war.

The IMF will release new forecasts on April 14, and the IEA is due to release a new monthly oil market report. The war has cast a deep shadow over the spring meetings of the IMF and World Bank, being held in Washington this week.

Mr Birol said the IEA had already released about 400 million barrels of oil from its reserves and was prepared to take further action if additional releases were deemed necessary.

“The 400 million is only 20 per cent of our reserves. We have still 80 per cent in our pocket,” he said. “We are assessing the situation, and if and when we decide it is the time, we are ready to act and act immediately.” REUTERS