IMF warns of oil price spike

The oil-related sanctions imposed on Iran could add at least 20 percent to market prices for crude oil, the International Monetary Fund warned. Iran has threatened to choke off key oil-shipping lanes through the Strait of Hormuz as sanctions pressure from Western countries increases. The U.S. and European governments say Iran is working on the technology needed for a nuclear weapon, an allegation Tehran denies. The IMF, in a note to delegates from the Group of 20 gathered at the Davos World Economic Forum, said sanctions on Iran would cut 1.5 million barrels of oil per day from world markets and greatly affect prices. "A halt of Iran's exports to OECD economies without offset from other sources would likely trigger an initial oil price increase of around 20 -30 percent, with other producers or emergency stock releases likely providing some offset over time," the IMF warned, The Daily Telegraph newspaper in London reported. Oil traded near the $100 per barrel mark in recent trading. Prices last year escalated because of the NATO offensive in oil-rich Libya, prompting the International Energy Agency to call on member states to release oil from strategic reserves. The IEA had said it wasn't taking action on the Iranian issue because there were no current market disruptions.