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Iran feels pinch of new EU oil sanctions

TEHRAN, Iran — As new European Union sanctions targeting Iran's vital oil industry took effect Sunday, Tehran acknowledged the measures aimed at reining in its disputed nuclear program were taking a toll.

The country's vice president said authorities had stockpiled imported goods and hard currency to help cushion the blow to the economy.

The ban by the 27-member EU on the purchase of Iranian oil dealt Iran its second economic setback in days, following fresh U.S. sanctions that prohibit the world's banks from completing oil transactions with Iranian banks. Combined, the measures significantly ratchet up the pressure on an Iranian economy already squeezed by previous rounds of sanctions.

"Today, we are facing the heaviest of sanctions, and we ask people to help officials in this battle," Vice President Mohammad Reza Rahimi was quoted as saying on state television's website. He said the "dastardly sanctions" might cause "occasional confusion" in the domestic market.

Iran is the second-largest OPEC producer, at about 4 million barrels of oil a day. The country relies on oil exports for about 80 percent of its public revenues. However, most of Iran's crude production is used domestically.

Iran reacted furiously when the U.S. and EU sanctions were announced, threatening to block the strategic Strait of Hormuz, a vital waterway used to ship about one-fifth of the world's oil. On Sunday, Iranian officials appeared to be backing away from that threat, which roiled international oil markets at the time.

The EU, which accounted for about 18 percent of Iran's oil exports, said last week that all contracts for importing Iranian oil will have to be terminated from Sunday. Also, European companies will no longer be involved in insuring Iranian oil.

In Washington, White House spokesman Jay Carney welcomed the EU oil embargo. In a statement, he said Iran must take "concrete steps" to resolve international concerns over its nuclear program.

The sanctions are the latest move in the West's standoff with Iran over its disputed nuclear program, which the United States and its allies suspect is aimed at developing atomic weapons. Iran denies the charges and insists its program is designed solely for peaceful purposes, such as energy and producing medical isotopes.

Three rounds of nuclear talks between Iran and world powers, including the United States, have failed to produce a breakthrough, prompting some critics to charge that Tehran is merely dragging out the negotiations to buy time to further advance its suspected weapons program. The United States and Israel have left the door open to a possible military strike if no agreement is reached.

Iran feels pinch of new EU oil sanctions 07/01/12 [Last modified: Sunday, July 1, 2012 11:41pm]

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