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25 January 2012 - 22:13

The International Monetary Fund (IMF) says sanctions imposed by the US and European Union on Iran's oil and financial sectors will cause the global oil price to rise by 20-30 percent.

A paper published by the world body on Wednesday said the oil price hike would occur “if Iran halts oil exports as a result of US and European Union sanctions.”

The IMF further stated that financial sanctions against Tehran may be "tantamount to an oil embargo" and would imply supply declines of about 1.5 million barrels per day from the world's fifth-largest oil producer.

That volume of supply disruption, according to the IMF, would be comparable to losses in output from Libya last year due to civil war in that country which pushed oil prices over USD100 a barrel.

The IMF had already highlighted the risks of a complete oil embargo on Iran in a note to deputies from G20 countries who met in Mexico City last week.

On December 31, 2011, US President Barack Obama signed into law new sanctions which seek to penalize countries importing Iran's oil or doing transaction with the country's central bank.

In their latest meeting in Brussels on January 23, EU foreign ministers also imposed new sanctions on Iran which include a ban on purchasing oil from the country, a freeze on the assets of Iran's Central Bank within the EU, and a ban on the sale of diamonds, gold and other precious metals to Iran.

EU foreign policy chief Catherine Ashton claimed that the new sanctions aim to bring Iran back to negotiations with P5+1 -- US, UK, France, Russia, China and Germany -- over the country's peaceful nuclear program.

The United States, Israel and some of their allies accuse Tehran of pursuing military objectives in its nuclear program and have used this pretext to impose four rounds of sanctions and a series of unilateral sanctions against the Islamic Republic.

Iran has refuted the allegations, arguing that as a signatory to the Nuclear Non-Proliferation Treaty and a member of the International Atomic Energy Agency, Tehran has a right to use nuclear technology for peaceful use.

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