Business, Finance & Economics

Europe shrugs off Iran's oil cut


Tension with Tehran has pushed the price of oil to an eight-month high.

ROME — There are plenty of things about Iran that scare the European Union, but a suspension of the flow of oil supplies isn't one of them.

EU officials brushed off the news Monday that Tehran had made good on a threat from President Mahmoud Ahmadinejad to cut oil supplies to some European nations, saying the bloc had ample reserves to withstand any Iranian sales ban.

“The continuity of supplies of crude oil and petroleum products to European consumers should therefore not be immediately affected, even in case of an abrupt halt of all imports from Iran,” said Marlene Holzner, the EU's Energy spokeswoman.

Read more: And the price of oil goes up

Iran's Petroleum Ministry announced it was halting oil shipments to Britain and France, in the latest step in a game of brinkmanship between Iran and Europe, which began when EU nations agreed on Jan. 23 to phase-in a boycott of oil purchases from Iran unless the Islamic Republic agreed to rein in its nuclear program.

The EU said then its sanctions would take full effect only in July, allowing existing contracts to play out and giving major importers of Iranian oil, such as Greece and Italy, time to find alternative suppliers. Tehran quickly responded by saying it would hit back by cutting oil supplies immediately, saying it could quickly find alternative markets.

From the EU's reaction, however, it seems unlikely Monday's decision will have much effect. According to EU data, Britain stopped importing any Iranian oil months ago, and the French oil company has stopped its imports — debt payments to Total made up most of the around 58,000 barrels of crude which France imported from Iran last year.

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Holzner said several other EU nations have already halted their imports from Iran, including Austria, Portugal and the Netherlands — all of whom have been singled out by the Iranian authorities as targets for a possible ban on oil supplies. Italy, Spain and Greece have also reduced their imports as they seek other suppliers, Holzner said.

She added that the EU has 120 days of crude stockpiled for emergencies and that so far no nation has has for a release of reserves.

The EU serenity in response to Iran's oil threats, does not extend to the wider issue of the Islamic Republic's nuclear plans.

European foreign-service officials are increasingly concerned that Iran's continued nuclear bravado could lead to an Israeli military strike that sparks a wider conflict in the Gulf region with the potential to create a major oil-supply disruption with a potential disastrous economic impact on the EU's fragile economy.