More support and time needed for Iranian oil embargo

The EU countries agreed to impose an embargo on imports of Iranian oil. This decision was made despite the fact that firstly, Europe itself may be affected and in particular Greece, Italy and Spain. They were affected by the crisis in the Eurozone most of all.

About 13 per cent of the total volume of oil imports in Italy falls to Iranian oil (183,000 bpd), Spain - 13 per cent (137,000 barrels per day) and Greece - 14 per cent (20,000 barrels). As of January-June last year, Iran delivered 450,000 barrels of oil per day to Europe. This means that 18 per cent of oil being imported from Iran falls to Europe.

This shows that the European market is not primary for Tehran, whereas there are significant supplies of Iranian oil for the indicated EU countries. However, diplomatic sources in the EU said that a final decision cannot be made soon such as at the meeting of EU diplomatic missions scheduled for January 30 in Brussels.

Perhaps, Europe needs a considerable period of time for imposing the embargo to negotiate with manufacturers and suppliers of oil able to replace the supplies of Iranian oil on long-term contracts.

However, even with a positive solution of the issue, the price on oil for European consumers will rise. This is explained by the fact that Iran, being in a difficult situation because of the sanctions imposed against it, offered its oil to buyers on more favourable terms.

Europe will need time to negotiate with other countries before the embargo is imposed. European Commissioner for Energy Günther Oettinger said in early December that the agreement on imposing an embargo on Iranian oil must unite not only the EU countries, but also other major oil importers such as the U.S. and Russia.

Europe understands that Iran will send the released volumes to other markets, which today are the main consumers of raw material after the embargo was imposed on Iranian oil. First of all, they are likely to be the markets of Turkey, south-east Asia and Africa.

Moreover, in exchange for support of the embargo, Europe will have to offer something to Italy, Spain and Greece, which are already in a difficult financial position.

In early December, the EU declared an embargo. However, Brussels later retracted this statement.

The EU decision to impose sanctions appears after the U.S., Great Britain and Canada announced imposing unilateral sanctions against Iran's energy and financial sectors of the economy on November 21, 2011. The French authorities proposed to introduce new unprecedented sanctions, to freeze the assets of the Iranian Central Bank, as well as to suspend the purchase of Iranian oil.

The reason for new sanctions was the report of the International Atomic Energy Agency (IAEA). It stated that Iran operated until 2003 to create nuclear weapons and that this activity may currently be conducted.

The U.S., Israel and several Western countries suspect Iran of trying to develop nuclear weapons. The Iranian government says that its nuclear programme is peaceful.


Seymur Aliyev /Trend/