Iran to Europe: Want oil? Meet these demands.
Iran has threatened to cut off its oil exports to Europe unless European countries agree to a series of economic concessions that would go against recently approved sanctions.
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Besides, Iranian imports “shouldn’t be so hard to be replaced.” The only country “that would be effectively hit is Greece because it imports between a third and half from Iran at terms no other supplies could match.”Skip to next paragraph
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The EU has been gradually cutting back on Iranian supplies for some time, but it still bought a quarter of Iran’s exports of 2.5 million barrels per day between January and October 2011, according to the International Energy Agency. Spain, Italy, and Greece account for three-quarters of that.
Meanwhile, Asian economies have been buying more. China buys 22 percent of Iran’s exports, India 12 percent, and most of the remainder is exported to Turkey, Japan, and South Korea, close EU and US allies.
'We can mess with you'
EU officials have said the embargo, while economically painful, is necessary to pressure Iran into foregoing nuclear enrichment. But not all agree.
“This embargo was introduced without any thought to the consequences. [EU leaders] clearly didn’t bother to talk to energy experts about this,” says Paul Stevens, senior research fellow in energy at London-based Chatham House and an expert on oil markets. The commission should explain “who came up this … idea because it was a very stupid decision.”
“If Iranians decide to do this, Europe would cope with a lot of difficulty. We won’t know until it happens,” Dr. Stevens says.
And he is not sure it is a toothless threat. “I’d be surprised if this is a bluff," he says. "They could easily sell the oil to China instead. And it makes sense that they would [unilaterally cut supplies to Europe] because it would push prices up. They are saying ‘You wanna mess with us, we can mess with you and probably do more damage.’ ”
Still, most doubt Iran would cut supplies unannounced, and oil prices brushed off any immediate supply disruptions. In fact, while Iran announced what it described as significant advances in its nuclear program and threatened oil supply cuts, it also said it was ready to negotiate with the EU and US.
“Iran’s role in the sanctions regime is to offset potential losses from decreased sales to Europe, so it wouldn’t be surprising to have more saber-rattling that allows prices to rise,” Mr. Tchilinguirian says. “Any geopolitical tension involving Iran will prompt market reactions based on the headlines. We are going to get more of these, rather than fewer.”
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