TEHRAN – European governments have agreed in principle to ban imports of Iranian oil, EU diplomats said yesterday, dealing a potentially heavy blow to Tehran that crowns new western economic sanctions imposing real pain just months before an Iranian election.
The prospective embargo from the European Union, along with tough US financial measures signed into law by President Barack Obama on New Year’s Eve, form a concerted western campaign to impose sanctions over Iran’s nuclear programme.
The US has greeted the development as “very welcome” news.
Iran says its nuclear programme is strictly peaceful, but western countries say a November UN report shows it has sought to build an atomic bomb. Talks between Tehran and major powers broke down a year ago.
Diplomats said EU envoys had held talks on Iran in the last days of December, and that any objections to an oil embargo had been dropped – notably from crisis-hit Greece which gets a third of its oil from Iran, relying on Tehran’s lenient financing.
Spain and Italy are also big buyers.
The embargo will force Tehran to find other buyers for oil. EU countries buy about 450,000 barrels per day (bpd) of Iran’s 2.6 million bpd in exports, making the bloc collectively the second largest market for Iranian crude after China.
The news caused a spike rise in oil prices, with Brent crude peaking at nearly $114 a barrel in intraday trading, up nearly $2 from Tuesday’s close.
Tehran insisted it would have no trouble: “We could very easily replace these customers,” said SM Qamsari, international director of the National Iranian Oil Co.
But the new US sanctions have already made it difficult for Iran to keep the customers it has, and could force it to offer steep discounts to countries willing to risk doing business with it, hurting its revenues. Biggest trading partner China, driving a hard bargain, has cut its order of Iranian oil by more than half this month.
Most traders expect Iran will find buyers for its crude, mostly in Asia, but it will have to offer substantial discounts. – (Reuters)