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Europe to Lose in Case of Iran Oil Sanctions |
At present most of Iranian oil supply are sent to
Asia and
South East Asia in particular.
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Despite strong opposition from Greece, and Italy and Spain (to a lesser
extent), France, UK and Germany are calling for oil sanctions against Iran.
Until two months ago, Iran oil sanctions were not on the agenda of the
European Union but the idea came up all of a sudden. Europe believes if the
sanctions are applied appropriately, they could turn into an effective tool
to pressure Iran. Some experts believe however that these measures are more
of a symbolic nature.
An
expert in energy issues is convinced that oil sanctions against Iran by EU
and US would be impossible and ineffective for three technical reasons.
Referring to the new illegal sanctions imposed on Iran by the US, the expert
said: "First of all, the purchase of Iranian oil by Europe over the past few
years had dropped for various reasons including financial problems. This in
return has lowered their products. On the other hand, Iran has never sold
its oil to the US and Canada and therefore oil sanctions by them cannot
cause any problem for Tehran. At present most of Iranian oil supply are sent
to Asia and South East Asia in particular."
Stressing that new oil sanctions would leave the least impact on Iran's oil
supply, the expert noted: "There are two questions here. One relates to
technical issues of refineries so that every country designs and constructs
its refinery in accordance with the type of its oil. Therefore, technically
speaking, if a refinery decides not to use the oil of a certain country it
should bear heavy costs to change technical procedures of its refinery."
The expert added: "Another very important point is that no country would
restrict itself to the oil of a few countries and would rather use an oil
basket. Iran's oil is currently present in the oil basket of most of the
buyers. Another very important point regarding Iran's oil sales which the
National Iranian Oil Company would not heed much is the way Iran receives
its oil money. This is something the officials should do something about.
Statistics released by the European Union show that import of Iranian crude
in 2010 constituted 5.8 percent of the entire EU imports which is a very
high figure. This places Iran at the fifth place after Russia, Norway, Libya
and Saudi Arabia in terms of oil supply to EU. Out of the Iranian crude
export to EU, 14.6 percent went to Spain, 14 percent to Greece and 13.1
percent to Italy."
As
reported by the mass media, France in a hostile move against Iran has urged
its partners to impose tougher sanctions against Tehran. The idea is to
fully ban oil and petrochemicals purchases from the Islamic Republic of
Iran.
The first step in this respect has been taken by the US administration.
American officials have also announced that they are counting on Russia's
support in the new round of sanctions against Iran. But Moscow has denied
having pledged any support. In the meantime, in recent weeks numerous
European oil companies have voiced opposition to any new Iran sanctions.
Decision Not in Europe's Interest:
Under circumstances that the possibility of an oil embargo against Iran by
Europe seems to have faded away, the Iranian oil minister has warned against
the consequences of such an embargo. He said the West would suffer most from
anti-Iran oil sanctions. "Iran is a main oil producer and its absence from
the global oil market would disturb the market," said Rostam Qasemi. The
minister said Iran could easily replace its oil buyers from Europe, adding
that an oil embargo would highly increase the global crude oil prices.
Meanwhile, Reuters reports that Europe would be the main loser in a possible
oil embargo against Iran. Instead, said the news agency, Russia would emerge
the main winner in case of oil sanctions because from mid October the price
of Russian crude has surpassed that of North Sea Brent. A higher price for
Russian crude would be to the detriment of European customers and this could
be an important factor in making Europe change course in its decision to
impose oil sanctions against Iran.
Iran can replace its European buyers with those in Asia. Meantime, in recent
years, several European refineries including those in Finland and Italy,
have developed their refineries in accordance with sour and heavy crude and
an embargo would hurt Europe more than Iran. |
