EU ban on Iran oil to raise fuel bills

The EU yesterday imposed an immediate ban on all new contracts for Iranian oil and gave Greece and other importing countries until July to find alternative sources.

The move is expected to increase the cost of oil across the region and heighten tensions.

Iran has threatened to block the Strait of Hormuz through which much of Europe’s oil supplies travel which would increase the cost of oil globally.

Additional sanctions, including freezing the assets of the country’s central bank and banning all trade with the bank was in line with increasingly tough sanctions from the US. It is the latest effort to get Iran to the negotiating table to discuss its nuclear programme.

Tánaiste and Foreign Affairs Minister Eamon Gilmore said the economic impact on Europe had to be weighed up against the seriousness of what was happening in the Islamic state.

“The very serious reports from the IAEA about the militarisation of their nuclear efforts cannot be ignored,” he said referring to the Vienna-based international atomic energy agency.

Threatened Israeli intervention would be extremely serious also and had to be prevented as it would be very destabilising, the minister said.

Europe could not be browbeaten by the threat of a blockade, which has to be weighed against the nuclear threat and the need to secure peace and security in the world. He said the situation was not a repeat of what happened in Iraq as the nuclear threat had been confirmed by the IAEA.

“Here you are dealing with an undisputed fact that Iran is building up its nuclear programme and you either ignore it or do something about it — we have to get Iran to negotiate meaningfully on it,” he said.

Greece, Italy and other countries in the Mediterranean that import Iranian oil had hoped their contracts could continue until October but some countries stressed the need for immediate action.

The EU authorities will help source alternative supplies, and the situation will be reviewed in May before the ban comes into force on July 1.

The embargo will hit Greece especially as it has been shut out of oil markets and buys its crude from Iran on good credit terms and earns money by refining the crude for export to the Balkans.

About 20% of Iran’s oil is exported to Europe.