Nov. 22 (Bloomberg) -- Oil prices may rise further on the prospect of a disruption in crude shipments from Iran, according to Citigroup Inc.
Iran’s exports of about 2 million barrels a day might be at risk because of an Israeli attack or military skirmish with another country, Citibank analysts led by Edward Morse said in a report today. Stopping Iranian shipments would probably add $10 to $20 a barrel to the price of oil, Morse said.
There’s a higher risk of a sustained loss of Iranian exports than of a long-term closure of the Strait of Hormuz, a narrow waterway between Iran and Oman at the mouth of the Persian Gulf. A shutdown of the channel for more than a week is unlikely given U.S. and allied forces in the region, the analysts said.
“Any impediment to flows of 17 million barrels a day through the strait, via mines, missile attack or the sinking of tankers, faces significant challenges,” Morse, New York-based head of commodities research at Citigroup Global Markets Inc., said in the report. “It’s very unlikely for prices to remain at a level of $175 or even higher for a sustained period.”
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