Sanctions against Iran: 'Hara-kiri' by the Europeans?

Reuters and other foreign media are subject to Iranian restrictions on their ability to film or take pictures in Tehran (Reuters/Caren Firouz)
Iran has halted oil sales to Greece in response to the EU sanctions coming into force in July. The country's Press-TV reports Tehran also cut supplies to Spain and may put on halt those to Germany and Italy.

This month Iran stopped selling crude to 2 Greek oil companies because they failed to pay their bills. It has already stopped exports of oil to Britain and France.

While Iran accounts for less than 5% of the world’s oil production for many countries it is essential. Europe is less reliant on Iran’s oil than Asian countries, but Europe’s weakest economies of Greece, Italy and Spain, heavily depend on Iranian crude.

The head of Russian state monopoly “Transneft”, says compensating for the loss of Iranian supplies which the EU will not get because of the sanctions is almost unreal.

 “It’s difficult to make up for this volume and imposing sanctions against Iran is like committing “hara-kiri” by the Europeans. And this policy of theirs can hardly be explained by common sense. It looks as an attempt not to be lagging behind a more powerful global player”, said Nikolay Tokarev.

Grigory Birg from Investcafe says reaching higher output and finding new sources will take a lot of time, that’s why we can’t talk about covering the Iranian oil gap.

The U.S. imposed an oil embargo against Iran, and sanctions against some Iranian companies, the country’s national bank and the Central Bank. The Americans say they will take new punitive measures targeting those buying Iranian oil. It’s believed the new sanctions will affect foreign banks dealing with Iran in oil. The EU followed suit.

According to the French Industry Minister Eric Besson, the Government says it is ready to supply the world with oil from its strategic reserves teamed up with the U.S. and the UK to reduce the record prices for petrol.