The European Union has put back its planned review of its oil embargo on Iran to June instead of May, EU diplomats said Thursday, when it will also review the timing of a ban on European companies from insuring the transportation of Iranian crude-oil exports.
The delay is partly a bid not to pre-empt talks on Iran’s nuclear program scheduled to take place in Baghdad later this month, diplomats said.
The review of the full oil embargo, due to come into effect July 1 in response to concerns about Iran’s nuclear program, was promised in January as a condition for gaining support from Greece, which is heavily dependent on Iran for cheap oil imports.
The ban on new shipping and insurance for Iranian crude cargoes was finalized in April, but the U.K. won temporary exemptions to allow European companies to provide liability and environmental insurance on shipments of Iranian crude until July 1. It would require a unanimous decision by all 27 member states to allow any change to the details of either the embargo or the shipping insurance ban.
“It seems unlikely that anything will change overall,” said an EU official who is familiar with the talks. “Though more countries are now asking the British to budge on the issue and not just consider their own interests.”
Most of the world’s shipping insurance businesses are based in Europe, with the lion’s share concentrated in the U.K. British diplomats have warned of spiralling oil prices if key Asian shippers aren’t able to sail to Iran because of the sanctions.
“Japan and South Korea are the worst hit by this measure, as they need Western cover for events like an oil spill,” the EU official said.
Diplomats said the timing of the planned review was awkward, coming ahead of May 23 when Iran and six major powers will hold a second round of talks on Iran’s nuclear program in Baghdad.
“We will review the sanctions in June at the earliest, instead of during Monday’s foreign ministers’ meeting,” said another EU official. “But the oil sanctions are our main tool to influence Iran, so it is unlikely we would soften that until there is real progress on the nuclear issue.”
Initially, the review of the embargo, which is the EU’s strongest action yet against Iran’s nuclear program, was supposed to take place by May 1. But in April member states agreed to give themselves extra time to look at their ability to cope with a full oil embargo and whether it would threaten the security of their energy supplies. The review is also supposed to consider the embargo’s effect on international energy markets.
The U.S., Israel and a number of European countries accuse Tehran of seeking to develop nuclear weapons. Iran has consistently said its nuclear program is for peaceful purposes.
