France wants the embargo to be delayed by no more than three months to allow nations including Greece, Italy and Spain to find alternative supplies, according to a French government official, who declined to be identified, citing state rules. While France is seeking a shorter exemption for existing crude purchase contracts, a six-month delay favored by more EU nations remains the more likely compromise, said the second person, an EU diplomat, who also asked not to be identified because the talks are confidential. Both officials spoke yesterday.
EU foreign ministers are scheduled to decide on the ban, which will probably also include an exemption for Eni SpA (ENI), Italy’s biggest oil company, at a Jan. 23 meeting. The embargo requires unanimity among the bloc’s 27 states. Iranian officials have threatened to block the Strait of Hormuz, through which almost 20 percent of the world’s oil flows, if exports are curbed.
“It is important for Iran to desist from statements on this subject and to engage instead with the offer of negotiations,” U.K. Foreign Secretary William Hague told lawmakers in the House of Commons in London today. “In the meantime, we are working ahead of next week’s foreign-affairs council in Brussels to extend sanctions on Iran, including an oil embargo on a phased basis, to increase the peaceful pressure on Iran to negotiate.”
Any attempt to block the waterway would be “very damaging to Iran, to their own economy and their own situation,” Hague said.
Oil rose for the first time in four days today as France pushed for faster enforcement of the ban and German investor confidence jumped the most on record. Crude for February delivery rose $1.20, or 1.2 percent, to $99.90 a barrel at 10:38 a.m. on the New York Mercantile Exchange.
The EU is moving toward the proposed oil embargo under pressure from the U.S. and isn’t “prepared to embark on such actions,” Ramin Mehmanparast, a spokesman for Iran’s Foreign Ministry, said at a press conference in Tehran today. He called the proposed sanctions “illegal and illogical.”
A gradual implementation of the embargo would satisfy the concern of nations most dependent on Iranian crude, including Italy, Greece and Spain. The three countries accounted for about 68 percent of EU imports from Iran in 2010, European Commission data show.
Nations including Germany and the U.K. also favored the shortest delay, while nations most exposed to imports from Iran pressed for an exemption of as long as 12 months, the EU diplomat said. The EU will probably adopt a six-month phase-in, two people with knowledge of the matter said on Jan. 13.
The U.S. and EU say Iran’s nuclear-development plans are aimed at building atomic weapons. Iran, the second-largest oil producer in the Organization of Petroleum Exporting Countries after Saudi Arabia, says its program is for civilian purposes only.
EU sanctions on Iran already include an embargo on equipment for and investment in the oil and natural gas industries. The bloc has also imposed restrictions on transfers of funds to and from Iran.
A group of U.S. senators called on the EU earlier this month to impose sanctions on Iran’s central bank in addition to the planned oil ban.