IMF: Cut in Iranian crude could boost prices 30%

Global oil price could rise by as much as 30% if Iran halts oil exports as a result of sanctions by the US and the European Union, according to a report by the International Monetary Fund.

Iranian leaders are considering a plan to halt exports of oil with immediate effect in response to the EU, which imposed an embargo on Iran's oil exports earlier this week.

If Iran makes good on its threats of an immediate end to oil sales to the EU, it would likely trigger an initial oil price rise of 20-30% or $20-30/bbl, IMF said.

IMF said the price impact caused by a cut in Iranian exports could be exacerbated by below-average oil stocks in many countries, the result of tight oil market conditions through much of last year.

IMF’s statement followed an announcement by Fitch Ratings agency that said the embargo on Iran’s oil imports to the EU will increase geopolitical risk in the Middle East region supporting high oil prices.

“Fitch believes that the EU ban on Iranian oil is largely credit neutral for EU integrated oil and gas companies,” said Arkadiusz Wicik, director in Fitch’s European energy, utilities, and regulation team.

“The cash flow impact of the ban may be negative for refining operations, but should be positive or neutral for upstream operations,” Wicik said.

Meanwhile, China echoed Russia in saying that EU sanctions on Iran announced this week in response to Tehran's suspected nuclear drive were not constructive.

“To blindly pressure and impose sanctions on Iran are not constructive approaches,” China's foreign ministry said, adding that it advocates resolving disputes through “dialogue and consultation” instead.

“Unilateral sanctions do not help matters,” Russia’s Foreign Minister Sergei Lavrov said earlier this week. “We will restrain everyone from making harsh moves. We will seek the resumption of negotiations.”

Iran exports 2.6 million b/d of oil. China is the largest importer, taking 543,000 b/d or 22% of Iran’s exports in first-half 2011. The EU is the second largest importer, taking 450,000 b/d or 18% of Iran’s crude exports.

Contact Eric Watkins at hippalus@yahoo.com.

Related Articles

Market watch: Energy futures prices rose slightly Friday

05/06/2002 Crude oil futures prices rose slightly Friday amid lingering uncertainty about a possible disruption of Middle East supplies, although tensions in ...

Gulf of Mexico oil service sector showing signs of an upturn

05/06/2002 The Gulf of Mexico oil service sector is experiencing the signs of an upturn, analysts with Simmons & Co. International, UBS Warburg LLC, and RBC D...

OTC: Industry, national agencies need to work together to make FPSOs work in the gulf

05/06/2002 Over the coming years, the oil and gas industry will have to keep an open line of communication with national agencies such as the US Coast Guard a...

Market watch: Energy futures prices fall as Iraq lifts embargo

05/07/2002 Crude oil futures prices fell Monday after Iraq announced plans to lift a self-imposed export embargo with exports expected to resume by Wednesday.

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected