Many analysts have expressed concern about the potential costs, economic and otherwise, of a military strike to stop Iran’s nuclear program – and rightly so. However, it is also important to take into account the heavy economic costs associated with inaction that would allow Iran to achieve nuclear capabilities.
Many have expressed concern that a crisis surrounding the Iranian nuclear program could spark a huge spike in oil prices, and seriously impede a global economic recovery. However, doing nothing could do the same thing, according to a new report by the Washington DC-based Bipartisan Policy Center.
If Iran achieves nuclear weapons capability, widespread regional instability in response could aggravate uncertainty about the security of energy production and transport, raising oil prices and negatively impacting the global economy, the well-known think tank agrees.
The report states,
Our analysis indicates that the expectation of instability and conflict that a nuclear Iran could generate in global energy markets could roughly increase the price of oil by between 10 and 25 percent, which, given current international oil prices, would result in prices $11 to $27 higher per barrel.
The complete report can be accessed at the Bipartisan Policy Center’s website.