IMF Chief Warns Of Sudden Rise In Oil Prices

The head of the International Monetary Fund warned yesterday that the disruption of Iranian oil exports could drive up oil prices by 30 percent.

AFP reports that during a two-day visit to India, Christine Lagarde told a press conference on Wednesday that a rise in oil prices would have “serious consequences” for the world economy.

Lagarde told reporters: “Clearly it would be a shock to economies if there was a major shortage of exports of oil out of Iran, it would certainly drive up prices for a period of time.”

The IMF chief said that a spike in oil prices would create serious challenges for the economies of countries that import oil, especially poorer countries.

The European Union has announced that starting in July of 2012, its member states will observe an oil embargo on Iranian crude exports.

The U.S. and the European Union have also boycotted Iran’s Central Bank, and Iran’s oil trade is carried out through the Central Bank. Iran’s trading partners face U.S. sanctions if they deal with Iran’s financial institutions.

The United States claims its sanctions are aimed at forcing Iran to meet its international commitments regarding its nuclear program.

Iran says, however, that it is committed to the provisions of the Nuclear Non-Proliferation Treaty and its nuclear activities are all peaceful.

Iran has given some indications that if its oil trade is disrupted, it may consider blocking the Strait of Hormuz, the strategic waterway that sees the daily passage of 20 percent of world’s oil supply.

The threat has affected the price of oil, although the United States has warned Iran that it will not allow any disruption of the usual shipping traffic in the Persian Gulf.