EU Iran Oil Embargo Likely Delayed Six Months

A European Union embargo on imports of Iranian (OPCRIRAN) oil will probably be delayed for six months to allow countries such as Greece, Italy and Spain to find alternative supplies, an EU official with knowledge of the talks said.

The embargo, which would need to be agreed by the 27 nation-bloc’s foreign ministers on Jan. 23, is also likely to include an exemption for Italy, so crude can be sold to pay off debts to Rome-based Eni SpA (ENI), Italy’s largest oil company, according to the official, who declined to be identified because the talks are private. A ban on petrochemical products would start sooner, about three months after ministers agree to the measure, the official said. Oil prices fell as much as 1.9 percent on the news to $98.93 a barrel in New York.

“Work by experts from the 27 member states is in a very intensive phase,” Maja Kocijancic, a spokeswoman for the European Commission, said by phone today from Brussels. “They are looking into different options for restrictive measures with a view to adoption on Jan. 23.” She declined to comment on possible phase-in periods or exemptions.

The phasing-in of the embargoes would satisfy the concerns of countries with the largest dependence on Iranian oil, including Italy, Greece and Spain, the official said. Those three countries accounted for 68.5 percent of EU imports from Iran in 2010, according to European Commission data.

The U.S. State Department had no immediate comment on the prospects for a delay in the EU embargo.

Three-Month Review

Iran, the second largest producer in the Organization of Petroleum Exporting Countries, pumped 3.58 million barrels of crude a day last month, according to Bloomberg estimates.

There will be a review every three months to assess the impact on EU economies, whether countries are managing to get alternate supply and to monitor the effect on oil prices, the official said.

France, Germany and the U.K. have been pushing for the embargo to increase pressure on Iran over its nuclear program and it has the support in principle of all 27 member states, the official said. Western countries allege that Iran’s nuclear- development plans are aimed at building atomic weapons. Iran says they are for civilian purposes and to generate electricity.

There are currently no plans for compensation to the affected European countries, the EU official said, and the current emphasis is on finding oil from alternative sources at similar prices.

Nuclear Scientists

The Iranian government said in a letter to United Nations Secretary General Ban Ki-Moon that a civilian nuclear scientist, Mostafa Ahamdi Roshan, who was killed by a bomb yesterday was the fourth victim of a foreign terror campaign. Iran has accused the U.S. and Israel of targeting Iranian nuclear scientists.

“We are very active in this branch of science,” Iranian Parliament Speaker Ali Larijani told journalists in Ankara today, referring to his country’s nuclear program. “If Israel thinks it can stop us with four acts of terror, their logic is flawed.”

Tensions over the ratcheting up of sanctions led Iranian Vice President Mohammad Reza Rahimi to threaten on Dec. 27 that Iran may block the Strait of Hormuz, the transit for about a fifth of the world’s oil, if the EU bans exports from the Islamic Republic. U.S. Joint Chiefs of Staff Chairman General Martin Dempsey said on Jan. 9 that Iran can temporarily choke off the waterway, through which 17 million barrels of oil pass each day, the Energy Department estimates.

Bloomberg