Jan. 6 (Bloomberg) -- A European Union embargo on Iranian oil will probably be phased in to protect countries with the greatest reliance on imports from the country, according to an EU official familiar with the talks.
EU foreign ministers are likely to agree to block Iranian oil imports at a meeting in Brussels on Jan. 30, and working groups are negotiating the details of how the embargo will be imposed, said the official, who declined to be identified because the talks are private.
Countries with the biggest dependence on Iranian oil, including Italy, Greece and Spain, have raised concerns over how existing contracts should be treated when the embargo is imposed, the official said. Phasing in the sanctions would help to ensure that Iran, rather than the European countries, loses out as a result of the embargo, he said.
France, Germany and the U.K. are taking the lead in pushing for the embargo to increase pressure on Iran over its nuclear program, the official said, adding that it has the support in principle of all 27 member states. 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.
Europe’s sanctions threat and an Iranian demand that U.S. warships stay out of the Persian Gulf have stirred new tensions between Iran and the West, contributing to higher energy prices. Crude oil traded in New York for February delivery was at $102.23, up 42 cents, at 12:46 p.m. London time, heading for a weekly gain.
Debts to Eni
Italian Prime Minister Mario Monti has said that an embargo should exempt crude sold by Iran to pay off debts to Rome-based Eni SpA, Italy’s largest oil company.
“An oil embargo is conceivable as long as it remains gradual and excludes the deliveries that serve to reimburse the billion of euros in debts that Iran owes to Eni, our national company,” Monti told France’s Le Figaro newspaper in an interview published yesterday.
Italy gets 13 percent of its imported crude from Iran, Monti said, making it more sensitive to a supply shock than other European countries. France taps Iran for only 3 percent of its oil imports, he said.
Greece, which relied on Iran for 14 percent of its oil imports in the first half of 2011, according to the U.S. Energy Department’s Energy Information Administration, has decided to abide by any curbs after blocking them last month, an official at the Greek Environment, Energy and Climate Ministry said on Jan. 3 on condition of anonymity.
The U.S. tightened its Iran sanctions on Dec. 31 and is pushing the EU to follow suit.
The Iranian Revolutionary Guard Corps will hold large-scale exercises in the Strait of Hormuz and the Persian Gulf next month, the state-run Fars news agency reported today.
--With assistance from James G. Neuger in Brussels. Editors: Eddie Buckle, Leon Mangasarian
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