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

PG&E indicted for San Bruno explosion

04/02/2014 A federal grand jury has indicted Pacific Gas & Electric Co. on twelve counts of violating the federal Natural Gas Pipeline Safety Act of 1968 ...

AFPM: Petrochemical industry needs skilled workers

04/02/2014 The current boom in shale resource development has sparked an urgent need in the petrochemical industry for technically skilled workers to build, o...

BLM launches EIS on existing White River National Forest leases

04/02/2014 The US Bureau of Land Management initiated an environmental impact statement on 65 existing oil and gas leases in Colorado’s White River National F...

EIA: Net energy imports in 2013 lowest in more than 2 decades

04/02/2014 Total US net imports of energy, measured in terms of energy content, declined 19% from 2012 to 2013, hitting the lowest level in more than 20 years...

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