x Abu Dhabi, UAETuesday 25 July 2017

Iran not threatened by 'ineffective' EU oil embargo

Tehran repeats threat of closing the Strait of Hormuz,if the West succeeds in preventing Iran from exporting crude oil.

TEHRAN // Iran expects the European Union to backtrack on its oil embargo and repeated a threat to close the Strait of Hormuz if the West succeeds in preventing Tehran from exporting crude, Iranian officials said yesterday.

"The West's ineffective sanctions against the Islamic state are not a threat to us. They are opportunities and have already brought lots of benefits to the country," the intelligence minister, Heydar Moslehi, said.

Speaking a day after the EU slapped a ban on Iranian oil - to take full effect within six months - in a move to press Tehran into curbing its contested nuclear programme and engage in negotiations with six world powers, the tone in the Islamic republic was defiant, even sceptical.

"The global economic situation is not one in which a country can be destroyed by imposing sanctions," Mr Moslehi said, repeating Iran's stance that with the EU in economic and monetary crisis, it needs Iran's oil more than Iran needs its business.

A spokesman for the oil ministry said Iran had had plenty of time to prepare for the sanctions and would find alternative customers for the 18 per cent of its exports that up to now have gone to the 27-nation European bloc.

"The first phase of this (sanctions action) is propaganda, only then it will enter the implementation phase. That is why they put in this six months period, to study the market," Alireza Nikzad Rahbar said, predicting the embargo could be rescinded before it takes full force.

"This market will harm them because oil is getting more expensive and when oil gets more expensive it will harm the people of Europe," Mr Rahbar said. "We hope that in these six months they will choose the right path."

The embargo will not kick in completely until July 1 because the bloc's foreign ministers who agreed to the ban were anxious not to penalise the ailing economies of Greece, Italy and others to whom Iran is a major oil supplier.

The strategy will be reviewed in May to see if it should proceed.

Iran, which denies international suspicions that it is trying to design atom bombs behind the facade of a declared civilian atomic energy programme, has scoffed at efforts to bar its oil exports as Asia lines up to buy what Europe rejects.

Iran's foreign ministry summoned the Danish ambassador yesterday to complain about the EU's "illogical decision", accusing Europe of doing the bidding of the United States.

Emad Hosseini, a spokesman for parliament's energy committee, said if Iran encountered any problem selling its oil, it would store it.

"If we don't export our oil to Europe, our oil will be saved and storage of oil will not harm us but we will have rich storage of oil," he said. "Closing the Strait of Hormuz is one of the country's strategies against the West's threats, especially an oil embargo," he said.

The United States, which sailed an aircraft carrier through the strait into the Gulf accompanied by British and French warships on Sunday, has said it would not tolerate the closure of the world's most important oil shipping gateway.

Fitch Ratings issued an assessment of the embargo's market effect saying it would likely cause an oil price increase.

"However, prices may not necessarily increase markedly from current levels as some of the risks related to the EU ban on Iranian oil appear factored in already," it said.

The embargo decision had no discernible effect on oil prices as it was a move that had been flagged well in advance and the threat to close Hormuz seemed remote.