A possible disruption in Iran's daily output of nearly four million barrels of crude will have catastrophic consequences for the global economy, a recent report suggests.
The recent pro-democracy protests in Libya have had a major impact on global oil supplies as the North African country has decreased oil exports following the turmoil.
Since the beginning of the popular uprising, Libya has reduced its oil output by about 850,000 barrels per day, sending global crude prices past USD 114 per barrel.
“Any interruption of Iran's oil supplies would have far greater consequences,” a report by The Guardian said on Tuesday.
Libya, the Organization of Oil Exporting Countries' (OPEC) ninth biggest producer, has an output less than a third of the Islamic Republic's.
The global oil market is extremely vulnerable to further instability in the Middle East region, according to Tony Dillon, an oil specialist at energy researcher Isis Heren.
"We're looking at a market which is pretty jittery about all aspects of Middle Eastern oil supply. Even countries like Oman, which a few weeks ago would have been regarded as quite stable, have experienced unrest. There is ongoing concern about the whole region," Dillon said.
On Monday, the US Federal Reserve chairman Ben Bernanke told the Senate banking committee that soaring oil prices threatened global economic recovery.
"Sustained rises in the prices of oil or other commodities would represent a threat both to economic growth and to overall price stability," Bernanke said.
The United Sates has threatened to use military force in Libya despite claims by Secretary of State Hillary Clinton that Washington respects the country's independence.