The International Monetary Fund (IMF) has warned of a 20-30% oil price spike if Iranian exports are disrupted.
The IMF warned that if the West imposed financial sanctions on Iran, it would be tantamount to an oil blockade, and the shock to the market could be as bad as from Libya’s revolution last year.
Iran produces 5% of global oil output.
Moreover, if Iran goes ahead with a threat to blockade oil exports via the Straits of Hormuz in the Gulf, the IMF said the shock could be even greater.
About a quarter of all oil produced globally, and some 40% of all oil exports – including those from Iraq, Kuwait and Saudi Arabia – are shipped through the Straits each year.
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