Reports in the media suggest that the European Union may ban Iranian oil imports
Reports in the media suggest that the European Union may ban Iranian oil imports from 1 July 2012. It is felt that the July deadline will give Member States the time to terminate existing contracts in accordance with the proposal made by the Danish Presidency on 15 January. Once the embargo is in place, Member States would have until the end of June to fulfil existing contracts with Tehran and will have to cease all imports from July onwards. No new contracts will be authorised before the July deadline.
Speaking to Reuters, European diplomats said that the EU Presidency intends to finalise discussions at the next meeting of EU foreign affairs ministers on 23 January, so that the agreement can be officially put into place in the days that follow.
According to one European source, though, no agreement has yet been reached. Greece, for example, is very dependent upon Iranian oil and has not yet given its agreement because it is still seeking alternative supply sources. Spain, too, is very dependent on Iranian oil but according to a US diplomat based in Spain, the country would still approve this programme.
Although European governments have agreed in principle to impose an embargo on Iranian oil in an effort to put pressure on Tehran over its nuclear programme, the way in which this embargo is put into place, as well as the date, still need to be decided, in liaison with the oil markets.
This Presidency compromise aims to find some common ground between countries such as France, for example, which would like to introduce a three-month deadline, and Greece, which would like a year-long implementation deadline. It also seeks to reassure certain Member States about the economic impact of an embargo on their economies.
According to experts, a grace period for existing contracts would weaken the impact of the embargo because 80% of purchases are made under long-term contracts.
Last year, the EU bought around one fifth of all Iranian oil, which means that, together with China, it is Iran’s biggest oil customer.
Source: Reuters
