Expert: New sanctions are to hit Iran's economy harder than ever

Azerbaijan, Baku, Dec. 2 / Trend S.Isayev/

The new sanctions imposed on Iran will hit the country's economy harder than ever, Iranian expert Reza Taghizadeh told Trend via telephone from London.

"These embargo sanctions are not directed against Iran's oil, but hit Iran's export indirectly and hit it hard. The sanctions target to prevent Iran from receiving its revenues from the oil export. With the new sanctions in place, it will be far more difficult for Iran to export oil," Taghizadeh noted.

EU has already accepted additional sanctions against 179 individuals and institutions associated with the Iranian authorities. The decision was taken at the meeting of the EU countries FMs in Brussels.

"Iran reacts harshly to the sanctions because it understands what is going to happen. Iran shows its anger as the sanctions make big hits to the country's economy," a member of Trend Experts Council Taghizadeh explained.

Iran seems to be experiencing problems with receiving payments from other countries for its oil exports.

According to Taghizadeh, India, China and South Korea have failed to make payments for the Iranian oil exports.

"The problem is not only about the payment for Iran's oil export, but also about shipping, because the shipping companies that take Iran's oil to the market face restrictions," he added.

According to Taghizadeh, Iran seems to be at risk of losing its oil buyers, while other countries might simply turn to other big regional oil suppliers, such as Saudi Arabia or Iraq.

According to the U.S. Energy Information Administration stats based for January-June of 2011, Iran exported 450,000 b/d to Europe Union, 341,000 to Japan, 328,000 to India, 244,000 to South Korea, 182,000 to Turkey and 543,000 to China.

Iran has exported $73 billion crude in 2010.

"Considering the issues with the Central Bank of Iran, it would be even more difficult to deal with all the financial transaction issues and shipments. Iran's foreign trade will also suffer," Taghizadeh underscored.

Iran's non-oil exports in the first eight months of the current Iranian calendar year (ended on November 21, 2011) amounted to 28.6 billion dollars, showing a 39.5 percent rise compared to the same period last year.

As for Asian countries, which at this moment are the biggest importers of Iran's oil (about 75 percent), Taghizadeh believes this can change dramatically, as other countries will try to diversify their oil suppliers.

"Saudi Arabia is the biggest oil exporter in the region, so Asian countries just might turn to other options. Iraq is becoming a big oil exporter as well, producing some 2 million of barrels of oil per day. Iran is suffering, because many of Indian and Chinese companies have already replaced Iran's oil with Saudi Arabia's oil.

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