Iran oil embargo can push economies into a recession - Standard and Poor
Standard & Poor’s warned that any high level response of Iran to US and EU oil embargo could boost oil to USD 150 per barrel and push global economies into a recession.
Iran might respond to sanctions with low level provocation such as slowing shipping through the Strait of Hormuz, keeping oil prices at their currently high level.
Mr Jean Michel Six S&P chief economist for Europe said that Iranian authorities could disrupt supplies of oil from the Persian Gulf by imposing tanker inspections or boarding merchant ships in its territorial waters, supporting oil prices because markets would increasingly view armed conflict as a real, if remote, possibility.
The likelihood of severe disruption of oil supplies through the strait, through which 20 percent of the world’s oil flows is low though if one did occur, it might boost oil to USD 150 per barrel and push economies into a recession.
Mr Elliot Hentov an S&P credit analyst in Dubai said that “For oil producing sovereigns of the Persian Gulf Cooperation Council Saudi Arabia, UAE, Qatar, Kuwait, Oman and to a lesser extent, Bahrain higher oil prices would actually be beneficial. As oil exporters, they would receive more foreign earnings that they could either use to stimulate demand or improve their government’s balance sheets.”
(Sourced from Bloomberg)