Thursday 26 January 2012

Iran blockade could spike oil prices by 30%

The Iran oil embargo enacted by the G20 could potentially lead to oil prices spiking by up to 30%, the International Monetary Fund has warned.

Iran currently supplies over 5% of the world's oil and oversees the passage of 40% of the world's exports through the Straits of Hormuz, which is vital for the shipment of any OPEC spare capacity.

In a note to the G20 leading industrialised countries the IMF said: "The oil market impact of intensified concerns about an Iran-related oil supply shock would be large... A halt of Iran's exports to OECD economies without offset from other sources would likely trigger an initial oil price increase of around 20-30% (about $20-30 a barrel currently)."

The IMF warned there could be much higher spikes should the Straits of Hormuz close, which Iran has already threatened to do.