Sanctions against Iran: pros and cons

The EU countries seem to come to an agreement on the issue regarding the embargo on exports of Iranian oil to the EU after a month of the EU first attempt to express a common opinion in this respect.

Then, in early December, Iranian Foreign Minister Ali Akbar Salehi said the attempts to ban the export of Iranian oil are unsuccessful because of the discord between the EU member countries. He was hinting at the first reaction of some European countries on the proposal to impose an embargo.

"If the EU has so many internal disagreements, it should know that its imaginary unity is something apparent," Salehi said. He added that each member-country of the community maximally pursues its own interests. Taking into account this speculative policy and existing differences, the EU will fail to impose sanctions.

It became known yesterday that the EU countries agreed to impose an embargo on oil imports from Iran. The final decision may be made at the next summit in Brussels in late January. Thus, the European Union 'picked up the gauntlet thrown down to it' and tried to demonstrate the unity of positions. However, whether these measures will have real influence will not depend only on the Old World.

According to the EIA, Iran exported 543,000 barrels per day to China, 450,000 barrels to the EU, 341,000 barrels to Japan, 328,000 barrels to India, 244,000 barrels to South Korea, 182,000 barrels to Turkey in the first half of 2011.

The share of supplies to the European continent hits 18 percent of total volume of oil exported by Iran. The main European importers are Italy, Spain and Greece.

Many people try to find an answer to the main question whether the losses in Iran's oil revenues will be vital to its economy, which depends on these revenues by 50 percent. If Turkey and the countries of south-east Asia do not support the sanctions and the Gulf countries do not replace the share of Iranian oil exported to Europe totally or mainly, thus preventing a sharp rise in prices, the European initiatives may fail to achieve the desired result.

Iran can take proactive steps without waiting for the EU's decision and giving time for preparation to Europe, by cutting oil exports to Europe first. This will lead to excitement around a possible sharp rise in oil prices on the world markets, followed by the rise. JP Morgan analysts said in December that as the sanctions are tougher, as more chances that Iran will do this. Do all players of the oil market need this? China, as the largest importer, has opposed the embargo. Japan is not enthusiastic about this. Turkey said it will continue to import from Iran.


Azer Ahmadbayli /Trend/