OPEC chief Abdalla Salem el-Badri warned that stand off between Iran and the West could damage the world economy and oil investments. It was his most lethal warning until yet defining the escalating tensions between Iran and U.S./European Union over the contradictory assumptions on the nuclear propaganda by the Middle Eastern country.
Abdalla Salem el-Badri who is the secretary general of the Organization of Petroleum Exporting Countries said increasing tensions between the West and Iran were putting pressure on oil prices and an impending explosive situation would turn out to be disastrous with much higher prices.
El-Badri worries for prices on oil that could shoot up beyond $150 a barrel, which would definitively pinch the already groaning world economy. As U.S. and the European Union thatch up a plan to stop Tehran from continuing with its nuclear program, Iran is adamantly resisting the oil embargo by threatening to close the important shipping transport line of Strait of Hormuz. Last week, the IMF had warned that EU measures causing Iranian oil disruptions could lead to Brent crude oil prices to $140 a barrel, which presently is trending around $112 a barrel.
The uprising in the oil markets will not benefit anybody, as there will be a lot of volatility and less spare capacity, although Saudi Arabia has promised to fill in the gap caused by the Iran disruption.
Oil producers are laughing all the way to the bank as prices hover over $100 a barrel due to the Iran tensions. Producers are expecting higher revenue following Arab disruptions last year. However, el-Badri made it clear that he does not want OPEC members to take advantage and generate revenue from the conflict.
After the Iran-Saudi argument in 2011, OPEC prefers to stay away from the present oil embargo conflict and concentrate as an economic institution. Isolating itself from the situation, it would prefer not to take sides of either Iran or the West. El-Badri expressed optimism that the tensions would resolve since the Western countries are aware of the consequences tied to Iran conflict.
The Iran oil embargo is a part of sanctions by the European Union whereby EU countries are banned from purchasing Iranian oil. In retaliation, Iran has threatened to close the Strait of Hormuz through which fifth of the world’s oil is transported. Tensions between Iran and Western nations are embroiled with risks giving birth to political and economic instability and military activity to keep the strait open.