TEHRAN: The World Bank Group (WBG) expected the embargo lifting of Iranian oil would result in around 13 percent decline in oil prices because of addition amount sold in the global markets.
In a report released Thursday titled (Lifting Economic Sanctions on Iran: Global Effects and Strategic Responses), the WB said that the most gains from the embargo removal will be for Iran “resulting in a welfare gain of about 18 billion dollars to the economy or an increase per capita welfare of 3.7 percent.” The losses “are steepest” for OPEC members, especially the Gulf Cooperation Council (GCC) members “which are expected to lose 3.9 percent in per capita welfare,” the report noted.
The report added that Iran could achieve benefits close to the upper range if GCC oil exporters limit their crude oil exports to support oil price, but “if they do nothing, however, the price of oil will decline by 13 percent.” The report used a global general equilibrium simulation model to quantify the effects of lifting economic sanctions on Iran.
It said that the 2012 European Union oil embargo on Iran was “the most far-reaching of the sanctions as they curtailed the volume of exports of Iran’s most important export commodity (64 percent of exports- 8 percent of global market),” thus, the removal of it “is expected to have the largest macroeconomic impact on Iran and the rest of the world.” The second component is the removal or significant reduction of the cargo inspections on Iranian exports and imports that were imposed as part of the sanctions regime which will lead to a reduction in transport and trade cost with Iran and most likely boost imports and exports of bulky goods such as agricultural, industrial products and machinery.
The third component, the report explained, is associated with improvements in non-tariff barriers affecting Iran’s cross-border imports of financial and transport services.
As the US and other countries lift restrictions on financial transactions and transport services, Iran’s imports of these services are expected to rise, the report explained. Both the US and EU (both net importers) will see a sizeable gain with 34 billion and 67 billion dollars respectively with an average of less than half percent of per capita gains while other OPEC members would decline by 2.9 percent and Russia 1.6 percent.
“The rest of the world is not significantly affected by the reduction of Iran’s trade costs because Iran is responsible for a negligible share of the world’s non-oil exports,” finds the report.
Iran, after reaching a historic Joint Comprehensive Plan of Action (JCPOA) with the (P+1) July of 2015 and Implementation Day was achieved last month when the International Atomic Energy Agency (IAEA) confirmed that Iran abided by the JCPOA, which then lifted multiple sanctions imposed on Iran.
