Jan. 10 (Bloomberg) -- European Union talks on an oil embargo on Iran are becoming bogged down over discussions on exemptions for existing supply contracts and the length of a planned phase-in period, according to four diplomats.
Greece, Italy and Spain are trying to soften a U.K. push for a blanket ban, concerned that an oil-supply shock would further damage their economies already hit by the European debt crisis, the diplomats said, declining to be identified because no final agreement has been reached.
Foreign ministers from the 27 EU member states are scheduled to decide at a Jan. 23 meeting in Brussels when to impose and how to phase in the embargo, which is designed to force Iran back to the negotiating table over its nuclear program, the diplomats said. The EU said today it brought forward the meeting from Jan. 30 to avoid a clash with a leaders’ summit the same day.
EU countries say that Iran’s nuclear-development plans are aimed at building atomic weapons. The Islamic republic, the second-largest oil producer in the Organization of Petroleum Exporting Countries after Saudi Arabia, says its program is for civilian purposes only.
The scenarios the EU is considering include imposing a ban on future Iranian crude imports that would leave existing contract shipments exempt until a later date, according to the officials. That would protect European countries that import the most Iranian oil, such as Italy and Greece, they said.
Another option would be to exempt Greece, which blocked an EU consensus on an embargo in December, until it arranges alternative supplies, according to one official. Greece 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.
The bloc is also considering exempting Eni SpA, Italy’s largest oil company, from the ban, according to the officials. Italy gets 13 percent of its imported crude from Iran, which supplied Rome-based Eni to pay off its debts.
The U.S. tightened sanctions on Iran on Dec. 31 and is pushing the EU to follow suit. The threatened measures, coupled with an Iranian demand that U.S. warships stay out of the Persian Gulf, have stirred new tensions in the region.
Crude oil for February delivery rose 1.4 percent to $102.74 per barrel at 10:49 a.m. on the New York Mercantile Exchange today. Iran has threatened to block the Strait of Hormuz, through which almost 20 percent of the world’s oil flows out of the Persian Gulf, if its exports are restricted.
EU sanctions on Iran already include an embargo on equipment for the oil and natural gas industries and a ban on investment in the sector. The bloc has also imposed restrictions on transfers of funds to and from Iran and vigilance over business with the country.
--With assistance from James G. Neuger in Brussels, Indira Lakshmanan in Washington, Rebecca Christie in Copenhagen and Patrick Donahue in Berlin. Editors: Justin Carrigan, Rob Verdonck
To contact the reporters on this story: Ewa Krukowska in Brussels at firstname.lastname@example.org; Jonathan Stearns in Brussels at email@example.com.
To contact the editors responsible for this story: Stephen Voss at firstname.lastname@example.org; James Hertling at email@example.com.