As European Union officials gear up for the expected passage of an embargo on oil imports from Iran in response to the country’s continued push to develop a nuclear program, some states are struggling to find alternatives for when the deliveries finally stop.
Under pressure from the United States, which halted all energy imports from Iran in 1979, EU actors have signaled their intent to introduce the sanctions following a meeting scheduled for the 23rd of January. According to Reuters, the embargo would prohibit member states from concluding new oil contracts with Iran or renewing any that are due to expire. The halt in energy imports is expected to impact both the Iranian economy and the European energy market, with many states relying on product from Iran despite a steady easing of trade agreements in recent years. However, despite strong support from the UK, France and Germany to implement the embargo, some states are seeking alternative approaches, especially those already reeling from weakened economies and threats to energy trading partners.
Among those, three of these states have launched efforts to delay, curtail or customize the actual implemented embargo to allow for more time to find alternative resources or protect amounts owed by Iran to domestic firms. In addition to targeted delays of application, states have sought the approval to keep receiving payments related to existing debts. According to EU data provided by Reuters, Italy, Greece and Spain take in about 500,000 bpd our of the 600,000 total coming into the European Union from Iran. Weighed down by dour growth estimates for the new year and massive spending cuts to meet EU demands, these three countries would stand to suffer most from any decrease in available energy products.
So far, the three countries have won approval to at least escape the embargo for the first six months of this year to allow them to seek out product alternatives, including increased input from Saudi Arabia. However, any such cooperation is likely to enflame the already tense relationship between OPEC members.