Members of the European Union have reportedly agreed to impose an embargo on Iranian oil trade in an effort to put pressure on the regime in Tehran which Western countries suspect is developing a nuclear weapon.
The embargo, which would represent the toughest European sanction on Iran to date, would go into effect before the end of January and eventually bar all member states from importing oil from Iran.
Iran sells some 15 percent of its oil to countries in the European Union.
Existing sanctions against Iran’s uranium enrichment program have capped its oil and gas production but were offset by buoyant crude prices. With demand for oil in China rising at a slower rate than expected and Saudi Arabia signaling a willingness to boost output if necessary, such comfort is unlikely to last.
China is one of the Iranian government’s prime financiers as it depends for 85 percent for its revenue on oil sales. Other main costumers include India, Japan and South Korea. The latter have been under American pressure to reduce their oil buys from Iran.
The Islamic nation has tried to deter further action by staging naval exercises in the Persian Gulf and threatening to shut the narrow Strait of Hormuz through which passes roughly 40 percent of the world’s seaborn oil transports every day.
The United States welcomed the news of Europe’s embargo plans. A State Department spokesperson argued that “the place to get Iran’s attention is with regard to its oil sector.”
President Barack Obama, earlier this month, enacted legislation that sanctioned Iran’s central bank and any financial institution that does business with it. The central bank is the main conduit for Iran’s oil revenues.