EU embargo on Iran's oil to affect world economy: statement

EU embargo on Iran's oil to affect world economy: statement

European sanctions against Iran's oil exports will affect world economy and hurt European and non-European countries, Islamic Republic of Iran Petroleum Ministry said in a statement released on Monday, IRNA reported.

"Hurried decision by EU states to use oil as a political tool will have a negative effect on the world economy and especially on recovering European economies which are fighting to overcome the global financial crisis," it added.

The statement continued that since just 18 percent of oil produced by Iran is exported to European countries, Islamic Republic can easily replace new markets with the European market.

It noted that oil sanctions against Iran will raise the energy price and will affect world economy's growth, including the weak recovering economies that are fighting to recover from the financial crisis.

The statement added that the European oil consumers will pay the cost of the EU decision and it will destabilize oil markets and undermine the global energy security.

Iranian Foreign Ministry Spokesman Ramin Mehmanparast, too, said on Monday that European Union sanctions on Iranian oil is a psychological warfare ... Imposing economic sanctions is illogical and unfair, and will not stop our nation from obtaining its rights.

The European Union banned imports of oil from Iran on Monday and agreed to freeze the assets of Iran's central bank, joining the United States in a new round of measures.

The latest sanctions by the European Union will be fully enforced by July 1. The sanctions on Iran oil is fraught with risks - of rising energy prices and global financial instability.

After news of the EU move, benchmark crude for March delivery rose 90 cents on the day to 99.23 dlrs a barrel in early morning European time in electronic trading on the New York Mercantile Exchange.

Russia's Foreign Ministry said the sanctions are a severe mistake likely to worsen tensions. 'This is a deeply mistaken policy, as we have told our European partners more than once,' the ministry said in a statement.

Last month, the US enacted new sanctions targeting Iran's central bank and its ability to sell petroleum abroad, but it has delayed implementing the sanctions for at least six months, worried about sending the price of oil higher at a time when the global economy is struggling.

China also does not support an embargo, and Japan's finance minister, Jun Azumi, has expressed concern about the effectiveness of US sanctions on Iran - not to mention their potential impact on Japanese banks.

In addition to Turkey, Greece, Spain and Italy in Europe, Asian customers of IRI's oil involving China, India, Japan, South Korea plus South Africa have also refused the sanctions or asked to be exempted from it.

Analysts believe that while the new sanctions are the toughest ever imposed, they still contain many loopholes. If Iran oil customers don't reach a consensus on oil embargo against IRI, partial sanctions could send crude and gasoline prices skyrocketing and therefore, increase Iran revenues which means punishment of US allies.

Iran is expected to still be able to sell its oil to places like China, India or other Asian countries. About 35 percent of Iran's oil exports currently go to China and India.

Washington and its Western allies accuse Iran of trying to develop nuclear weapons under the cover of a civilian nuclear program, while they have never presented any corroborative evidence to substantiate their allegations. Iran denies the charges and insists that its nuclear program is for peaceful purposes only.

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