While Washington is patting backs over Europe’s agreement on Iranian oil sanctions, Tehran’s reaction has been to brush it off.
European governments said on Wednesday that, in principle, they support banning imports of crude from the Islamic Republic, if Iran pursues its nuclear ambitions.
This was hard to negotiate and will be tough to apply; the countries more dependant on Iran’s oil were the hardest to convince.
The European Union bloc collectively is the second-largest market for Iranian crude after China. But in the end, Greece – and other objectors – toed the line. Its debt pressures have deterred some suppliers but not Tehran.
Greece has stopped buying crude from Russia, Azerbaijan and Kazakhstan. Athens said standing firm with its EU partners would need “careful, coordinated study.”
Oil brings in 60 percent of Iran’s revenue. The EU buys around 18 percent of Iranian oil exports. More than 40 percent of Italy’s oil comes from Iran, and it meets half of Greece’s needs. Spain and Belgium are also important customers.
Doing without Iran’s supplies means finding other sources, like Libya and Saudi Arabia. Forecasters warn the price will climb to 200 dollars per barrel.
With the global economy already in weak health, the Iranians say they are not worried, and that others would hurt before they do.
Iranian Foreign Ministry spokesman Ramin Mehmanparast said: “The first countries to be damaged by an oil embargo on Iran will be western countries.”
China’s negotiating position is strong. It has already more than halved its imports from Iran for January, seeing sanctions tighten. Ditto for next month. The top buyer of Iranian oil and fastest growing major oil importer, China is reluctant to join an embargo.
Market expert Jonathan Barratt said: “It’s going to be an interesting form of diplomacy, where you’ll find that these economies – India, China and Japan – will probably get reduced prices for these imports of oil from Iran, because Iran needs to sell, but on the side you’re going to see the US and other nations trying to apply pressure for them to try and find other markets to source their energy needs.”
But at the same time they are downplaying sanctions, the Iranians have acted jittery lately, threatening to close the Strait of Hormuz, where tankers exit the Persian Gulf with 40 percent of oil supplies for the whole world.
With economies dependent on these, there is a risk of military conflict, but the British, with a US-led security force in the Gulf, said any attempt by Iran to close the Strait would fail.