IMF Sees Hormuz Reopening Only in March 2027, and the Gulf Pays for It

BANGKOK — The International Monetary Fund now assumes the Strait of Hormuz will not reopen until March 2027, and the Gulf economies on either side of it are carrying the assumption: Saudi Arabia is forecast to shrink 3.3 percent this year, Kuwait 16.7 percent and Qatar 15.6 percent.

The fund’s World Economic Outlook, released on Tuesday at its annual meetings, raised global growth for 2026 to 3.1 percent from 3.0 percent in July and left 2027 at 3.4 percent, Xinhua reported. Headline inflation is forecast at 4.7 percent this year and 4.1 percent next. The figures rest on oil averaging $95.74 a barrel this year, up about 41 percent from 2025, and $87.39 in 2027, with conditions in the strait broadly back to prewar levels by October 2027.

A forecast this sensitive to one date deserves scrutiny. In April the IMF’s reference scenario assumed a short-lived conflict and a 19 percent rise in energy prices. Six months later its baseline has the strait not reopening for about five more months. The IMF states the date; OPEC, whose report EH covered on Tuesday as OPEC cutting oil demand growth for a sixth month, left what its 2027 rebound assumes about Hormuz unstated in the accounts reviewed.

The Middle East and North Africa is forecast to contract 2 percent this year, 3.1 points worse than the April forecast and the only region expected to shrink, The National reported. Saudi Arabia’s 2026 forecast was cut by five points from July’s 1.7 percent growth, according to Xinhua. Oman, at 4.1 percent growth, is the one Gulf economy forecast to expand. Iraq is expected to shrink 16 percent, Iran 7.6 percent and the United Arab Emirates 3.9 percent, a seven-point cut from April. The fund estimates that closing the strait would have cut global growth by 0.9 point this year without offsetting responses, and that rerouting, extra output elsewhere, stock draws and lower oil intensity have reduced the net hit to about 0.3 point.

The rebounds are as large as the falls, and they depend on the same date. Qatar is forecast to grow 18.8 percent in 2027, Kuwait 17.1 percent and Bahrain 13.9 percent. Saudi Arabia’s finance ministry said last week that it expects 12.8 percent growth next year, The National reported, against the IMF’s 7.9 percent. The IMF’s own adverse case, with oil at $130 a barrel through the first quarter of 2027, would cost global growth 0.2 point this year and 0.5 point next and lift 2027 inflation by 1.1 points to 5.2 percent, Al-Monitor reported.

The strait is not shut in the way the assumption sounds. Shipping data from Kpler, cited by The National, show confirmed clearance of about 11.9 million barrels a day, roughly 30 percent below the prewar baseline, with wide daily swings, while EH reported on Monday that Trump ruled out Iran strikes until November as Hormuz tankers burned. The IMF warns that oil inventories “are being depleted toward stress levels that could trigger sharp price jumps,” Xinhua reported, and the fund names that spike as the key risk.

The headline hides a narrow base. Thirty-two countries now account for 95 percent of global growth, down from 54 in April, and the IMF has downgraded about 47 percent of economies since then. The United Kingdom and Japan are not expected to see core inflation back at 2 percent until the end of 2027. India is forecast to grow 7.0 percent in both 2026 and 2027, the fastest of the major economies, against 2.3 percent for the United States, 1.1 percent for the euro area in 2026 and 1.3 percent for the United Kingdom. China is forecast at 4.5 percent this year.

Resilience is the word the fund keeps using, and then qualifying. Silvana Tenreyro, its chief economist, said the global economy “has been resilient, but that resilience is reaching its limits.” In its financial stability report, published the same day, Athanasios Vamvakidis said “resilience is not safety,” and named a correction in AI markets and a spike in sovereign bond yields as risks. The IMF’s scenarios show why: faster AI adoption could add 0.6 percent to global output by 2029, but if the productivity gains fail to arrive, a US loss of 0.8 percent combined with higher bond yields could cut global output by 1.1 percent by 2028, Al-Monitor reported. Asian AI shares sold off on the day, with South Korea’s Kospi closing 5.5 percent lower, Fortune reported.

What the accounts reviewed do not show is the fund’s plan if March passes with the strait still contested. They give the cost of $130 oil, but not what the baseline would say if its assumption lengthened again, as it has already lengthened since April.