International Monetary Fund said that the fund is closely monitoring disruptions to energy markets, warning that sustained price increases could drive inflation higher and slow economic growth. IMF spokeswoman Julie Kozack has stated that the closure of the Strait of Hormuz has cut off access to roughly 20 percent of the world's oil and seaborne LNG supplies. Energy infrastructure in the Gulf Region and Iran has been damaged, and this has disrupted oil and gas production. She further highlighted three channels through which these disruptions can affect the global economy, regional economies, and individual economies.

The first is commodity prices. The impact on commodity prices is going to be determined by how long the Strait of Hormuz is closed and the extent of damage to regional hydrocarbon production facilities. Oil and gas prices have increased by more than 50 percent over the last month to over $100 a barrel. In addition, fertilizer shipments have been disrupted. And this, along with transportation disruptions, raise risks that we could see increases in food prices. And those could be substantial, again depending on the duration and intensity. And then, of course, for individual countries and regions, the specific impact of these commodity price increases are going to depend on the specific circumstances of each country.

The second channel is inflation and inflation expectations. If prolonged, higher energy prices will lead to higher headline inflation. Central Banks are also going to be keeping a careful eye on, is then whether there are what we would call second round effects on broader inflation, and also very importantly, whether there would be effects on inflation expectations, she noted.

Kozak noted that if we look historically at energy price shocks, kind of a broad rule of thumb is that for every 10 percent increase in the oil price, if it were to persist, say throughout the rest of this year, this could lead to a 40-basis point increase in global headline inflation and a fall in global output of between 0.1 and 0.2 percent.

The third channel is financial conditions. She noted that we have seen reactions in global markets. Global stock prices have declined, and bond yields have increased across a range of countries, including in advanced economies like the US, the UK, and Europe, but also in emerging and developing countries. Volatility has increased. The US dollar has appreciated, and the currencies of a number of emerging economies have weakened. The overall impact, of course, is going to depend very much on the duration and intensity of the conflict.