Brent oil price firms over $111 after IMF warn on Iran sanction possibilities

The price of Brent crude oil firmed above $111 a barrel on Thursday after the IMF (The International Monetary Fund) warned that global crude oil prices could rise as much as 30 percent if Iran halts oil exports as a result of US and European Union sanctions.

Latest Brent Oil Price

In London, Brent crude oil futures for March 2012 delivery was trading at $111.10 a barrel, 16.20 GMT today on the ICE Futures Exchange, or 1.1 percent higher.

IMF Warning Over Iran Sanctions

The IMF highlighted the risks of rising tensions over Iran sanctions in a note on Wednesday sent to deputies from G20 countries who met in Mexico City last week.

If Iran halts exports to countries without offsets from other sources it would likely trigger an “initial” oil price jump of 20 to 30 percent, or about $20 to $30 a barrel, the IMF said in its first public comment on a possible Iranian oil supply disruption.

The oil 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, the IMF said.

Financial sanctions against Tehran may be “tantamount to an oil embargo” and would imply supply declines of about 1.5 million barrels per day from the world’s fifth largest oil producer, the IMF said.

That volume of supply disruption would be comparable to losses in output from Libya last year due to civil war that pushed oil prices over US$100 a barrel. Iran exports about 2.6 million barrels per day of oil.

Oil traders are following the latest news regarding Iran after the European Union this week imposed a ban on the Islamic Republic’s oil and of assets owned by its central bank.

However, Iran’s President Mahmoud Ahmadinejad on Thursday insisted that his country would not be hurt by newly imposed Western sanctions.

“Once our trade with Europe was around 90 percent but now it has reached to 10 percent and we are not seeking this 10 percent… experience has shown that the Iranian nation will not be hurt.” Ahmadinejad said on state television today.

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Brent oil price firms over $111 after IMF warn on Iran sanction possibilities