The heads of the International Energy Agency (IEA), the International Monetary Fund (IMF) and the World Bank have announced in a joint statement that they will form a coordinated group to maximise their institutions’ response to the energy and economic impacts of the war in the Middle East.

The organisations stated that the Middle East war, which is now in its fifth week, has caused major disruptions to lives and livelihoods in the region and triggered one of the largest supply shortages in global energy market history.

"The impact is substantial, global and highly asymmetric, disproportionately affecting energy importers, in particular low-income countries. It is already transmitted through higher oil, gas and fertilisers prices and is triggering concerns about food prices as well. Global supply chains, including of helium, phosphate, aluminium and other commodities, are affected, as is tourism due to flight disruptions at key Gulf hubs. The resulting market volatility, weakening of currencies in emerging economies and concerns about inflation expectations raise the prospect of tighter monetary stances and weaker growth.

"In these times of high uncertainty, it is paramount that our institutions join forces to monitor developments, align analysis and coordinate support to policymakers to navigate this crisis. This is especially the case for countries that are most exposed to the downstream impacts from the war and those confronting more limited policy space and higher levels of debt," the organisations said.

To ensure a coordinated response, the IEA, IMF and World Bank will form a group to assess the severity of impacts across countries and regions through coordinated data sharing on energy markets and prices, trade flows, fiscal and balance-of-payments pressures, inflation trends, export restrictions of key commodities and supply chain disruptions; coordinate a response mechanism that may include targeted policy advice, the assessment of potential financing needs and related provision of financial support (including through concessional financing) and the use of risk mitigation tools as appropriate; and mobilise relevant stakeholders, including other multilateral, regional, and bilateral partners, to deliver a coordinated and efficient support to countries in need.

The group will also work with, and draw on, other international organisations’ expertise as needed.

"We are committed to working together to safeguard global economic and financial stability, strengthen energy security and support affected countries and people on their path to sustained recovery, growth and job creation through reforms," they stated.

It is not yet clear how long the conflict in the Middle East will last and, if resolved, it may take some time for shipping through the Strait of Hormuz to fully resume and for energy prices to stabilise.