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Iran says EU oil embargo will fail
by Staff Writers
Tehran (AFP) Jan 23, 2012

Oil rises after EU slaps embargo on Iran oil
New York (AFP) Jan 23, 2012 - Oil prices rose modestly Monday after the EU slapped an embargo on Iran's crude exports as part of tough new sanctions aimed at stopping Tehran from funding its disputed nuclear program.

New York's main contract, West Texas Intermediate crude for March delivery gained $1.25 to $99.58 a barrel after the widely-expected embargo was announced.

In London Brent North Sea crude for March climbed 72 cents to $110.58 a barrel.

After weeks of talks, the European Union Monday agreed to ban oil imports from Iran as part of a concerted effort with the United States to pressure Tehran to halt its alleged nuclear arms program. Tehran denies seeking nuclear weapons.

The EU also froze the assets of the country's central bank "while ensuring that legitimate trade can continue under strict conditions."

The impact on the markets of the well-telegraphed sanctions was limited. While they set an immediate ban on new imports of oil from Iran, existing contracts would be phased through July 1, a move designed to limit the impact on country's like Greece, which has depended heavily on Iranian oil.

"The import ban... will be implemented gradually over a period of several months, which should dampen its inflationary effect on the oil price," said Commerzbank analyst Carsten Fritsch.

Iran has been selling about one-fifth of its crude to EU nations, with Greece, Spain and Italy the top buyers.

"With a daily import volume of 450 thousand barrels and accounting for nearly 20 percent of total Iranian oil exports, the EU is the second-largest customer of Iranian oil," Fritsch noted.

Andy Lipow of Lipow Oil Associates said: "The hope for the EU is that Iran will sell less of its own crude, impacting revenues."

"Meanwhile, European Union countries who where purchasing Iranian crude will need to find alternative sources," he said, pointing to Saudi Arabia, which has increased its production, and Kuwait.

Iran on Monday branded as "unfair" a decision by the European Union to impose an embargo on Iranian oil exports as its lawmakers vowed the ban would neither alter Tehran's nuclear policies nor affect its economy.

"The method of threat, pressure and unfair sanctions against a nation that has a strong reason for its approach is doomed to fail," Foreign Ministry spokesman Ramin Mehmanparast said, quoted by the state broadcaster's website.

The spokesman said the newly adopted punitive measures would not prevent Iran from achieving its "inalienable rights."

The term is frequently used by Iranian President Mahmoud Ahmadinejad and other officials to refer to Tehran's nuclear programme which they say is designed to master only civilian applications of the technology.

Western powers suspect Tehran is developing an atomic weapons programme.

The European Union on Monday slapped an embargo on Iranian oil exports as the West ramped up pressure on Tehran over its controversial nuclear drive and urged it to return to the negotiating table.

EU foreign ministers agreed on an immediate ban on oil imports and a phase-out of existing contracts up to July 1. They also froze the assets of Iran's central bank while ensuring legitimate trade under strict conditions.

Mehmanparast said that the EU decision was shaped "under the political pressure of the United States," and warned that Tehran would immediately replace any country that turned its back on Iran's vast energy reserves.

The EU sanctions are among some of the toughest actions so far aimed at reducing the Islamic republic's ability to fund its nuclear weapons programme.

Iran sells about 20 percent of its oil to EU nations, in large parts to Greece, Italy and Spain.

Iranian lawmakers also downplayed the EU ban.

Ali Adyani, a member of the Iranian parliament's energy commission, said the decision would "only serve some American and European politicians. It will not have any effect on Iran's economy," Fars news agency reported.

Another commission member, Hassan Shabanpour, rejected the sanctions as "propaganda", telling the parliament's website Saudi Arabia would not be able to compensate for Iran's oil exports to Europe.

The measures would cause a "drastic hike in oil prices" across the globe, he warned.

But the impacts of the new sanctions regime are becoming apparent as Iran's currency, the rial, continued a drastic weeks-long drop in value against the dollar on Monday.

The unofficial exchange rate in central Tehran was about 20,500 rials against the dollar during the day, the official IRNA news agency reported.

Although Iran's government insists there is no connection between the rial's slide and new sanctions, some officials have admitted a psychological effect as international sanctions spook ordinary Iranians.

The government has tried to shore up the rial by imposing a lower rate in banks and currency exchange bureaus, while also banning transactions outside of such outlets.

Last week, Iran's central bank banned possession and transactions in foreign currencies, including the dollar, without an official invoice, warning offenders would be prosecuted.

But many exchange bureaus have refused to buy or sell dollars at the imposed rates, thereby prompting along a black market despite police efforts to enforce the ban.

A sudden acceleration in the slide was seen after US President Barack Obama at the end of December signed into law more sanctions hitting the central bank and targeting foreign firms which do business with the Islamic republic.

The new EU sanctions meanwhile would make it even more difficult for Iran, OPEC's second largest producer, to be paid in foreign currency for its oil exports, worth more than 100 billion dollars in 2011.

The currency crisis has provoked a rush for gold and other non-currency assets, with the price of gold coins in Iran rising by 25 percent since January 18.

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Israel: EU oil embargo on Iran 'step in right direction'
Jerusalem (AFP) Jan 23, 2012 - Israeli Prime Minister Benjamin Netanyahu on Monday cautiously welcomed an EU decision to slap an oil embargo on Iran in a bid to force it to halt its nuclear programme.

"Today the European Union decided to impose sanctions on Iran's oil exports," Netanyahu said at the start of a meeting of his ruling right-wing Likud party.

"I think it is a step in the right direction," he said, while indicating it was "impossible" to know what the result of these sanctions would be.

"It is necessary to pressure Iran very hard and very quickly and we must examine these sanctions in the light of their results. Until today, Iran continues to create nuclear weapons unhindered."

His remarks were made shortly after EU foreign ministers meeting in Brussels agreed to slap an embargo on Iran's oil exports as well as financial sanctions in a bid to put pressure on Tehran over its nuclear drive and push it to return to negotiations.

"This tightening of the sanctions and the tone adopted by the Europeans is important because it makes clear to the Iranians that it is unacceptable they continue their nuclear programme," Israel's Intelligence Minister Dan Meridor told army radio.

"Iran must understand that there is a determination to prevent it from acquiring nuclear weapons," said the senior cabinet minister who is also responsible for the atomic affairs portfolio.

"The Iranian regime is concerned about the impact of these sanctions, which have a chance of succeeding," he said.

But he said it would have been better for such sanctions to have been put in place "faster."

In order to be effective, such sanctions should also be applied by countries such as Japan and South Korea, which "continue to purchase oil from Iran and who must participate in the sanctions in order to raise the price" for the Islamic republic, he said.

The EU imported some 600,000 barrels of Iranian oil per day in the first 10 months last year, making it a key market alongside India and China, which have refused to bow to pressure from Washington to dry up Iran's oil revenues.

Top EU diplomats in Brussels on Monday agreed to tighten existing sanctions by banning imports of Iranian crude as well as targeting finance, petrochemicals and gold in a bid to pressure the Islamic Republic.

The measures come in the wake of reports by the UN atomic agency, the IAEA, that Tehran may be inching ever closer to building a nuclear bomb.

Israeli Foreign Minister Avigdor Lieberman, who is currently in Vienna, also welcomed the move as "an important step which expresses European understanding and willingness to deal with the biggest threat to world peace.

"We hope this decision will serve as a warning to the rulers of Iran and will cause them to change their policies regarding the achievement of nuclear weapons without the need for further difficult steps," a statement from his office said.

After weeks of fraught talks on the terms of an embargo expected to hurt financially-distressed EU-member states, ministers on Monday agreed on an immediate ban on oil imports and a gradual phase-out of existing contracts between now and July 1.

They also froze the assets of the country's central bank in the toughest steps yet to reduce Iran's ability to fund a nuclear weapons programme.

Israel fears a nuclear-armed Iran would pose an unacceptable threat to the Jewish state and has refused to rule out a pre-emptive military strike.

It has also been pushing for biting sanctions on Iran's oil and banking sectors in a bid to force Tehran to abandon its nuclear programme, which Israel and the West believe masks a drive to develop a nuclear bomb, an ambition which the Islamic Republic strongly denies.


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