10 July 2008

OPEC Secretary General Warns of Extreme Prices in Event of Strike on Iran

He is saying that there are no supplies or reserves that can replace the loss of Iranian production.

Abdalla Salem El-Badri presents the price spikes as potentially "unlimited", which is obviously hyperbole, but when one considers that there is no spare capacity, losing about 5% of oil production doesn't just produce price spikes, it produces a real shortage, where one may not be able to find oil at any price.

If there were an interruption of this nature, I would expect oil to spike past $200/bbl within a few weeks.

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