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Iran Oil Halt to OECD Likely to Raise Price by $30, IMF Says

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Jan. 25 (Bloomberg) -- A halt of Iran’s oil exports to countries in the Organization of Economic Cooperation and Development would likely lead to a crude price increase of as much as $30 a barrel, the International Monetary Fund said.

The blockade of Iranian oil “without offset from other sources” would trigger an initial gain of around 20 to 30 percent, or about $20 to $30 a barrel at current prices, the IMF said in a document released today. The closure of the Strait of Hormuz could trigger a much larger rally, according to the IMF.

Iran has threatened to close the Strait, the transit point for about a fifth of global oil supply, if an embargo against its oil exports is implemented. The European Union announced Jan. 23 that it would ban oil imports from Iran starting July 1 to pressure Iran over its nuclear program, which Western nations say is aimed at producing weapons.

Financial sanctions imposed by some OECD countries against Iran may “be tantamount to an oil embargo” that would reduce supply by 1.5 million barrels a day, the IMF said in the document prepared for a Jan. 19 meeting of Group of 20 deputy finance ministers in Mexico.

Oil for March delivery gained 45 cents, or 0.5 percent, to settle at $99.40 a barrel on the New York Mercantile Exchange. Prices have risen 15 percent in the past year.

To contact the reporter on this story: Moming Zhou in New York at mzhou29@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net