The International Monetary Fund has said rising oil prices may lead to high inflation and slow growth across the world.
It stated that the rising oil prices may echo the 1970s when geopolitical tensions caused fossil fuel prices to spike.
It disclosed this in a new report titled, ‘Lower oil reliance insulates world from 1970s-style crude shock.’ According to the IMF, the war in Ukraine and sanctions on Russia are causing substantial economic spillovers, notably for energy.
The Washington-based lender said, “For some, rising oil prices may echo the 1970s, when geopolitical tensions also caused fossil fuel prices to spike.
“Memories of the high inflation and slow growth that followed—known as stagflation—have fueled concerns about a possible repeat. Importantly, though, times have changed.”
It added that oil price increases have been contained by spare production capacity in some countries and petroleum reserves in others.