IMF Chief: Oil Supply Matters

Yesterday I wrote about the latest meme to come out of the White House: that the president cannot control oil prices. ¬†This is of course ridiculous. ¬†Should the president choose a path that would increase supply — even if not immediately — the price of oil would go down.

Everyone knows that while the oil market (like all markets) can be manipulated, in the end when supply outpaces demand prices go down; and when supplies are tight relative to demand prices go up.

More proof:

IMF chief Christine Lagarde warned Tuesday that crude oil prices may spike by up to 30 percent if Iranian supplies were disrupted, causing “serious consequences” for the global economy.

The standoff between Iran, the world’s second-largest supplier of oil, and the West over the Islamic Republic’s nuclear program is seen as a flashpoint that could sharply increase world crude prices.

“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,” Lagarde told reporters in New Delhi, wrapping up a two-day visit.

The International Monetary Fund (IMF) has calculated that an interruption in oil supplies from Iran could increase oil prices by 20 to 30 percent, said Lagarde, who arrived in India at the weekend from neighbouring China.

via FRANCE 24.