The two centres of this crisis are the 24-mile Strait of Hormuz south of Iran and 7,000 miles away in the White House.
This week was the unique opportunity for the rest of the world to make its economic case to US President Donald Trump’s administration directly at the Spring meeting of the International Monetary Fund (IMF) and World Bank – taking place in Washington DC just down the road from the White House.
The sense I got speaking to the majority of G7 finance ministers, some central bankers, and some of the world’s top financiers was unhappiness about the rest of the world picking up the inadvertent but predictable costs of the US’s decision to go to war.
It was the Chancellor Rachel Reeves who was especially vocal on the “folly” and “mistake” of war “which is not ours”.
The meetings of finance ministers such as the G20 breakfast were sombre affairs. According to participants, the United States was the only voice in the room projecting short-term confidence.
Asian financiers in particular displayed clear worry “about real shortages of energy,” according to those in the room. Shortly after multiple concerns were expressed around the breakfast table, US Treasury Secretary Scott Bessent popped up on US financial TV to say there was nothing to worry about. Markets and the economy would recover fast, he said.
‘Slower moving shock’
However, the Canadian finance minister François-Philippe Champagne, who was present at all the key meetings and has been at the sharp end of dealing with Trump’s tariff war, had a different take.
“Geography doesn’t change. People don’t change that much either, so that is going to be a risk in terms of world energy that we’ll have to manage for years to come, even when the conflict is over,” he said.
Kristalina Georgieva, IMF managing director told me, the world faced a “slower moving shock” while the World Bank’s president Ajay Banga told me about the impact on economically poorer countries.
Iraq is not shipping or producing oil, which is normally responsible for 85% of revenues. Bangladesh, with significant household needs for gas for cooking, is cut off from Middle East suppliers. And Pacific Island nations with little energy storage are waiting for tankers and container ships at the end of very long shipping routes. These are just some real examples of extreme supply-chain fragility exposed by the stoppage in the Strait.
In response, the World Bank has readied support funds of up to $100bn (£74bn) – more than for the Covid lockdowns – to help economically poorer countries deal with rising energy and food costs.
Speaking before Iran said it would temporarily reopen the Strait, Georgieva warned: “March was a tough month, but April is likely to be even tougher.”
“Why? Because the tankers that left by 28 February have reached their destinations, and there are no new deliveries coming… A tanker is a slow-moving vessel. It would take 40 days to get all the way to Fiji.”
Despite the promising developments on Friday, the countdown clock for world food prices is very much ticking. Urea, the key input for fertiliser, has doubled in price. While countries in the north of the world are planting food now, the problem for global food availability could come in June to July.
Banga said: “The real problem will be, if fertiliser is not available three months from today, and we reach the planting season of the non-northern countries, then we start getting into a difficult cycle on food availability.