According to the International Monetary Fund, oil prices will gain 30% on average in 2012 compared with a year earlier on possible supply disruption from Iran.
The IMF in its new annual report of World Economic outlook has said that Iran related geopolitical oil supply risks extend beyond the reduction in oil production and exports that appears to be in the making already and is priced in by markets.
The following is the text of IMF’s report:
The impact on oil prices of a potential or actual disruption in oil supplies involving the Islamic Republic of Iran the world’s third largest exporter of crude oil would be large if not offset by supply increases elsewhere.
A halt of Iran’s exports to Organization for Economic Cooperation and Development economies would likely trigger an initial oil price increase of about 20% to 30% with other producers or emergency stock releases likely providing some offset over time a part of this is likely priced in already. Further uncertainty about oil supply disruptions could trigger a much larger price spike.