The International Monetary Fund (IMF) has warned that global oil prices could rise 20-30 percent if Iran stops exporting oil as a result of US and EU sanctions.
In its first public comment on the possible disruption of Iranian oil supplies, the Washington-based lender said financial sanctions on Iran “would be tantamount to an oil embargo,” and could result in supplies declining by around 1.5 million barrels per day, Reuters reported.
Iran is the world’s fifth largest oil producer, responsible for 5 percent of global oil ouput. Sanctions could trigger a shock to the oil market as serious as that caused by Libya’s revolution last year, according to the BBC.
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The IMF also cautioned that if Iran follows through on its threat to block oil exports through the Strait of Hormuz in the Gulf, the shock could be even greater.
About 25 percent of all oil produced around the world, and around 40 percent of all oil exports – including from Iraq, Kuwait and Saudi Arabia – are transported through the key shipping channel each year.
“A blockade of the Strait of Hormuz would constitute, and be perceived by markets to presage, sharply heightened global geopolitical tension involving a much larger and unprecedented disruption,” the IMF said in a note to the Group of 20 (G20) major industrialised countries, according to Fox Business.
The comments will put further pressure on the White House, which has been trying to get countries to reduce Iranian oil shipments without causing prices to rise ahead of November’s US presidential election, Reuters reported.
Western countries have been calling on Iran to halt its nuclear program, maintaining that it is being used to develop weapons, and threatening sanctions.
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