The European Union banned imports of oil from Iran on Monday and imposed a number of other economic sanctions, joining the United States in a new round of measures aimed at deflecting Tehran's nuclear development program.
In Iran, one politician responded by renewing a threat to blockade the Strait of Hormuz, an oil exporting route vital to the global economy, and another said Tehran should cut off oil to the EU immediately.
That might hurt Greece, Italy and other ailing economies which depend heavily on Iranian crude and, as a result, won as part of the EU agreement a grace period until July 1 before the embargo takes full effect.
Under the deal, EU governments will have to stop signing new contracts with Tehran from the moment the ban comes into place -- probably as soon as this week -- but will be able to fulfill existing contracts until July 1.
The United States, France, Britain and Germany accuse Iran of seeking to build a nuclear bomb, but Tehran says its nuclear drive is peaceful.
The expected sanctions follow fresh financial measures signed into law by U.S. President Barack Obama on New Year’s Eve, and will mainly target the oil sector, which accounts for some 90 percent of Iranian exports to the EU. Europe is Iran’s second-largest oil customer after China.
“We want them to think ‘This is really getting very, very serious now’,” said one European diplomat, according to Reuters.
Other than the oil embargo, the EU measures are also expected to include sanctions against the Iranian central bank and a ban on trading in gold with the government, diplomats say.
But EU sanctions are likely to take effect slowly. During weeks of negotiations among the EU’s 27 members, Greece and other southern European states pushed hard for a lengthy grace period to limit their own economic costs.
Greece, in particular, is heavily dependent on Iranian oil -- it sources nearly a quarter of its oil imports from Iran -- and has argued that it needs time to find alternative sources.
EU foreign ministers meeting in Brussels will also reassure Athens that it will still be able to buy oil on reasonable terms after the ban goes into effect.
Greece, which relies on financial help from the EU and the International Monetary Fund to stay afloat, now gets Iranian crude on preferential financing terms.
“The financial situation of Greece at the moment is not the brightest one, and rightly they are asking us to help them find a solution,” a senior EU official told reporters on Friday.
With a significant part of EU purchases of Iranian oil covered by long-term contracts, the grace period will be an important factor in the efficiency of EU measures.
The unprecedented effort to take Iran’s 2.6 million barrels of oil per day off international markets has kept global prices high, pushed down Iran’s rial currency and caused a surge in the cost of basic goods for Iranians.
A diplomatic push is underway, officials say, to secure supplies from other producers. Saudi Arabia, the world’s top producer, said this month it would increase production by about 2 million barrels per day.
Meanwhile, global powers involved in negotiations on Iran’s nuclear program are still waiting for a reply to a letter sent to Tehran months ago by EU foreign policy chief Catherine Ashton, her office said Friday.
U.S. Secretary of State Hillary Clinton said Friday that Iran must show a “seriousness and sincerity of purpose” if it is to resume the talks, according to AFP.