EU agrees to Iranian oil embargo ‘in principle’

Published on Thursday 5 January 2012 00:00

European governments have agreed in principle to ban imports of Iranian oil, EU diplomats said yesterday.

The move is a major blow to Tehran, and crowns new Western sanctions imposed because of Iran’s refusal to co-operate over monitoring of its controversial nuclear programme

It follows tough US measures signed into law by president Barack Obama, intended to gradually choke off trading in Iranian oil.

Iran insists 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 late 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. Spain and Italy are also big buyers.

“A lot of progress has been made,” one EU diplomat said. “The principle of an oil embargo is agreed.”

The embargo will force Tehran to find other buyers for oil. EU countries buy about 450,000 barrels a day of Iran’s exports, its second biggest market after China.

Western countries have imposed various sanctions on Iran for years with little impact but the latest measures target its oil industry, which accounts for 60 per cent of its economy.

Most oil traders expect Iran will still find buyers for its crude, but will have to offer discounts, cutting back the revenue it relies on to subsidise basic goods.

Tougher sanctions appear to be having an impact, with food prices soaring in Iran. Its rial currency has lost 40 per cent of its value against the dollar over the past month.