The European Union tightened its sanctions against Tehran on Thursday and laid out plans for a possible embargo on Iranian oil in response to mounting concerns in the West over the Opec producer's nuclear work. At a meeting in Brussels, EU foreign ministers decided new sanctions should be drawn up in time for their next meeting in January.
That could lead to gradual cuts in Europe's imports of Iranian crude. Separately, they added 180 Iranian people and entities to a sanctions blacklist that imposes asset freezes and travel bans on those involved in the nuclear programme which Tehran says is for peaceful purposes. Concern over Iran's programme grew this month after the International Atomic Energy Agency issued a report that suggested Iran has worked on designing an atom bomb.
French Foreign Minister Alain Juppe said after meeting his counterparts in Brussels that the EU would work with its partners to offset any shortfall if an oil embargo were imposed. "We are working on it," he told reporters when asked about the possibility of an oil ban. "We have to work with different partners so that the interruption of (oil) deliveries from Iran could be compensated by a rise in production in other countries."
France, which has pushed for oil sanctions, appears to have overcome resistance among some EU member states who had expressed concerns over economic costs of an oil embargo. Experts say global crude prices could rise if the EU bans Iranian oil, which could bring additional economic pain as Europe struggles with a debt crisis and the spectre of recession.
Greece, in particular, had been reticent, because financial woes have led it to buy more Iranian crude. Sources say Tehran has been offering better financing terms at a time when banks are reluctant to extend loans to Athens. "Greece has voiced some concerns, we have to take them into account," Juppe said.
Swedish Foreign Minister Carl Bildt said he was prepared to agree to a crude oil embargo, but questioned the effectiveness of such a measure. "I am prepared to go along with that," he told reporters. "I don't think it will necessarily have that much of an effect because of the nature of the global oil market." German Foreign Minister Guido Westerwelle said there were still connections between Iran and Europe that needed to be cut off in order to squeeze the nuclear programme financially.