In its World Economic Outlook report, the IMF said in a worst case scenario - where oil, gas and food prices spike and remain high this year and next - global growth could fall below 2% in 2026.
"This would mean a close call for a global recession which has happened only four times since 1980," it said, the most recent being during the Covid pandemic.
Energy prices have soared since the war began more than six weeks ago after the key Strait of Hormuz shipping route effectively closed and peace talks between the US and Iran failed.
The IMF said: "Once again, the global economy is threatened with being thrown off course - this time by the outbreak of war in the Middle East at the end of February 2026."
It said the most severe conditions that could lead to a worldwide slowdown would include oil prices reaching an average $110 per barrel this year and hitting $125 in 2027.
Based on these assumptions, the IMF said inflation could reach as much as 6% next year. This could force central banks to increase interest rates to slow the pace of price rises.
IMF chief economist Pierre-Olivier Gourinchas told the BBC a prolonged conflict would lead to spiralling inflation, push up unemployment and lead to food insecurity in some countries.
He warned that even if the conflict ended today, the impact on oil supply would be as big as the fallout from the 1970s oil crisis, when Arab oil producers placed an embargo on the US and other countries which backed Israel during the Yom Kippur war.
But Gourinchas said the world is less dependent on oil and fossil fuels, so the impact on consumers would be less severe.
Oil has risen close to $120 during the Iran conflict but has since fallen back and on Tuesday, a barrel of crude cost $98.85.
Moreover, the IMF pointed out that the risk of recession would only increase if severe conditions continued over two years.
It said that if the conflict is resolved in the next few weeks and if energy production and exports from the Middle East begin to normalise by the middle of this year, global growth would ease to 3.1% for 2026.
That is below an earlier forecast of 3.3%. It also left its prediction for global growth next year unchanged at 3.2%.
Of the world's advanced economies, the IMF has forecast that the UK will be the hardest hit by the energy shock from the Iran war.
It cut its estimate for UK growth this year to 0.8%, from a previous prediction of 1.3%. However, it expects the UK to then recover with economic expansion of 1.3%.
Oil exporting nations in the Gulf are likely to see a sharp slowdown in economic growth or even a contraction this year, according to IMF forecasts.
It estimates that Iran's economy will shrink by 6.1% this year. However, it forecasts a rebound of 3.2% in 2027 - providing the war ends in the next few weeks.
Some countries such as Qatar, a major supplier of liquefied natural gas (LNG), have been targeted with missiles and drones by Iran.
Qatar's Ras Laffan, the world's largest LNG refinery, has been struck and is not expected to be fully operational for some time.
US Treasury Secretary Scott Bessent told the BBC a "small bit of economic pain for weeks" is worth eliminating the risk of Iran deploying nuclear weapons.
"I wonder what the hit to global GDP would be if a nuclear weapon hit London…I am saying that I am less concerned about short term forecasts, for long term security," he said.
As the BBC has previously reported, the threat of Iranian ballistic missiles to London is remote.
Bessent said "the biggest risk you can take is one you don't know you were taking" and that US and Israeli strikes had removed the "tail risk" of Iranian nuclear strikes against Western countries.