The nations of the EU have agreed to impose an oil embargo on Iran deciding that no new oil delivery contracts could be made with the Islamic state and existing contracts would only run until July.
This move is designed to put further pressure on Iran to open up its nuclear programme to international scrutiny and ensure it is being pursued for purely peaceful purposes. And it also follows the strong message of US, British and French warships sailing through the Straits of Hormuz recently after Iranian threats to blockade it.
Calling this part of a ‘twin track’ approach the EU wants to discourage Iran from what it suspects is a nuclear weapons agenda (or make it economically impossible to do so) but also to show that they are willing to talk with Iran.
Iran supplies the world with about 2.6 million barrels a day and, after Saudi Arabia, is OPEC’s second largest producer of oil. 20% of its exported oil (some 600,000 barrels or a tad over 95 million litres) goes (went) to the EU, which is its biggest single market area.
But several EU countries have struck deals with Iran. Greece gets about a third of its oil from Iran, Italy 13% and Spain 10%. These countries plans to deal with their debt could be thrown into disarray if they now have to tear up their preferential price contracts with Iran and cast about for another supplier. Turkey is another of the four main importers of Iranian oil.
On top of this the EU has also agreed to freeze the assets of the Iranian central bank and ban the trade of gold with it.
This, following on the recent US measures, will place enormous, possibly crippling pressure on the Iranian economy. But it will in the process also place severe strains on the EU finances at possibly the worst of times.
The Times of India reports that Russia and China are worried about the US led sabre rattling in the area saying that “A leading state-run Chinese daily warned on Monday that Moscow and Beijing were seriously concerned over US attempts to go to war with Iran, IANS reported from Beijing. After Iraq and Afghanistan, the US "is preparing for a potential confrontation with Iran, and appears confident of another successful air strike.”