IMF says normalization of energy and commodity prices will take time

Friday 26 June 2026 - 13:22

By: Azzat Manal

IMF says normalization of energy and commodity prices will take time

The International Monetary Fund (IMF) has said that the normalization of global energy and commodity prices will take time, even after recent developments that eased tensions in key energy-producing regions.

According to the Fund, a decline in energy and raw material prices has been observed following an agreement between the United States and Iran to halt hostilities and reopen strategic shipping routes in the Gulf region. However, the IMF stressed that a full return to normal trade and pricing conditions is not immediate.

IMF spokesperson Julie Kozack stated that the institution will update its global economic outlook in early July, including whether it will maintain its previous growth scenarios outlined in April, which were based on different trajectories of geopolitical tensions involving Iran.

She noted that the global economy had shifted in May from a more optimistic baseline scenario—assuming a quick de-escalation—to a more cautious outlook, with projected global growth of around 2.5% in 2026 under conditions of prolonged disruptions and elevated energy prices.

Under this scenario, oil prices were assumed to average around 100 dollars per barrel, accompanied by tighter financial conditions and higher inflation expectations. However, Kozack added that inflation pressures have remained relatively contained due to central bank policies and continued access to international financing.

In commodity markets, Brent crude prices have fallen to around 73 dollars per barrel, marking their lowest level since before the recent escalation of geopolitical tensions. Prices of fertilizers, metals, and other industrial inputs have also declined as shipping activity resumes from Gulf countries.

Despite this improvement, the IMF warned that global supply chains still require time to fully stabilize, particularly due to logistical delays and the gradual recovery of trade flows.

The Fund also expressed concern over the impact of volatility on developing countries, especially energy-importing nations in Africa with limited fiscal buffers. Meanwhile, India is expected to maintain strong domestic demand, with projected real GDP growth of 6.5% for the 2026–2027 fiscal year.