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EU officials agree in principle on Iran oil embargo

05 January 2012 10:16 (UTC +04:00)

European officials, who had been discussing the move for some time, still need to reach a formal agreement, a step expected to be taken at the end of the month. They are expected to impose the embargo in stages, in an effort to ease the impact on world oil markets, and to provide special exemptions to ease the impact on certain countries, experts said.

Even so, the move is expected to have a major effect on Iran, which sells about 20% of its oil to Europe. European and American officials hope the move will reduce Iranian government income, by forcing Iran to sell the oil to other customers at steep discounts.

The U.S. and its European allies suspect Iran of trying to develop nuclear weapons. Iran insists its nuclear program is for only civilian uses.

Economic sanctions are taking an increasing toll on Iran’s economy. The Iranian currency recently plunged in value to a new low against the dollar after President Obama signed a bill that threatens to impose sanctions that could further isolate Iran from the world economy.

Iranian officials have threatened to cut off oil tanker traffic through the strategic Strait of Hormuz, through which about 20% of the world’s crude oil passes, and to retaliate against the United States for any further sanctions.

Michael Singh, managing director at the Washington Institute for Near East Policy, said the European move would have a "major effect" on Iran, and would be more consequential than the latest round of U.S. sanctions.

The top five European importers of Iranian oil are Italy, Spain, Greece, the Netherlands and France, said Mark Dubowitz, an expert on energy sanctions at the Foundation for Defense of Democracies.