EU ministers impose more sanctions on Iran

European Union foreign ministers adopted extra sanctions on Iran, in particular targeting investment in the country’s oil and gas industries, as well as curtailing its refining and natural gas capabilities.

“The message to the Iranian government could not be clearer: the longer it refuses to talk…about its nuclear program, the greater the pressure and isolation Iran will bring upon itself,” said Britain’s Foreign Sec. William Hague.

But the Iranian government rejected the move, saying it would have no effect on the country’s oil and gas industry or its nuclear policy.

“Sanctions will only further complicate the conditions and they will have no impact,” said Ramin Mehmanparast, a spokesman for Iran’s foreign ministry. “One should think about the necessity of cooperation by all countries in resolving the global crisis.”

The EU move follows earlier efforts by the UN and the US. The UN Security Council imposed a fourth set of sanctions on Tehran in early June, but the US and the EU decided to impose their own penalties against the Iranian energy sector.

The sanctions are part of a twin-track approach with EU foreign affairs chief Catherine Ashton seeking to revive talks between Iran and six world powers—the US, UK, France, Germany, Russia, and China.

According to one EU diplomat, “This (package of sanctions) is about applying pressure, but applying pressure in order to bring the Iranians to the table to talk.”

The pressure is especially on Iran’s ability to refine its own products or to import them. Iran is the world’s fourth largest producer of crude oil but it imports 40% of its fuel needs because it lacks enough refining capability to meet demand.

The US and EU sanctions, viewed as much tougher than the UN’s sanctions, are “expected to have a material impact on the country’s energy industry,” the International Energy Agency said last week.

The IEA noted it was “significant” that China and Russia agreed to back the UN sanctions but that those did not include specific measures aimed at Iran’s energy sector.

The US and EU sanctions were harder, and “longer term, development of the country’s oil and gas industry will clearly be adversely impacted,” the IEA said.

“These sanctions are surprisingly strong,” said Mark Fitzpatrick, director of the nonproliferation program at the International Institute for Strategic Studies in London. “They go much further than the UN sanctions.”

“Most of the sectors that have been targeted in the EU sanctions are ones over which Europeans have a substantial leverage,” said Fitzpatrick, adding that few other countries can provide the kind of financial services that will be cut off by the European measures.

“Few other countries supply technology for liquefied natural gas, nobody else does re-insurance … The European Union has very wisely found areas over which it has real leverage and cannot be supplanted,” he said.

Underlining Fitzpatrick’s remarks, the insurance market Lloyd’s of London—which controls 15-20% of the global marine insurance sector—said it would not insure or reinsure petroleum shipments going to Iran.

That decision will have effects elsewhere, with more players pulling back from offering coverage to Iran, as Lloyd’s is considered a major influence on other insurance markets.

Even ahead of the new EU sanctions, traders reported a steep decline in the number of shipments reaching Iran during July, with only three cargoes of gasoline reaching the country—a sharp drop from the 11-13 cargoes Iran normally requires during the summer holiday driving season.

According to Reuters, the gasoline was supplied by Turkish refiner Tupras and Unipec, the trading arm of China’s Sinopec.

ogj.com