The International Monetary Fund has warned that a sustained increase in oil prices could raise global inflation by about 40 basis points.

The IMF’s Managing Director, Kristalina Georgieva, issued the warning on Saturday in an interview with Bloomberg, citing the potential economic impact of the ongoing tensions between the United States and Iran.

Her comments come as escalating hostilities between the two countries heighten concerns about possible supply disruptions in the Middle East, a region that accounts for roughly one-third of global oil production.

Georgieva also warned that the crisis could slow global economic growth, urging policymakers worldwide to brace for the ripple effects of rising geopolitical uncertainty.

“What I can tell you from prior experience is that if we are to have an increase of energy prices by 10% and that stays for some time, stays for a year, inflation would go up by 40 basis points, growth will slow down somewhere between 0.1% and 0.2%,” she said.

She further said that such a scenario would demand a measured response from policymakers to preserve economic stability.

“In other words, it is an impact that has to be taken into account. So policymakers have to brace for it,” she added.

Georgieva also cautioned that rising energy prices and growing geopolitical tensions could lead to currency volatility, especially across emerging markets.

She noted that several emerging-market currencies are already facing depreciation pressures, a trend that could worsen debt-servicing challenges for countries with large borrowings denominated in United States dollar.

“We see emerging market currencies depreciating. For those of them that borrowed in dollars, it makes the service of that more expensive,” she said.

However, Georgieva said export-oriented economies could gain modestly from weaker currencies, as depreciation may boost the competitiveness of their exports in global markets.

Global oil prices have climbed sharply in recent weeks as investors respond to fears that the conflict could disrupt crude exports from the Gulf region.

The Middle East is home to critical oil shipping routes, including the Strait of Hormuz, through which roughly one-fifth of the world’s oil supply moves each day.

Brent crude prices rose above $92 per barrel on Friday, extending weekly gains to more than 27 per cent as signs emerged that the earlier calm in the oil market had faded.