Today there are variety of reports regarding Iranian Oil Minister Rostam Qasemi’s statement that the EU would not sanction Iranian oil exports because it would harm the global crude market. EU leaders have recently been calling for increased sanctions against Iran due to Tehran’s disputed nuclear program. This has included discussions on new sanctions targeting Iran’s energy, transport, and banking sectors.
Iran has already been targeted at least four times by U.N. sanctions and international sanctions for refusing to halt its nuclear program in the face of accusations from the United States and its allies saying its aim is to develop a nuclear weapon. Iran has denied these allegations, saying it needs nuclear technology to generate electricity. Iranian authorities say the sanctions have had no impact on Iran’s economy, who remain OPEC’s number two oil producer with 2.6 million barrels a day worth of oil exports. According to some reports, Iran’s economy is 40 percent reliant on oil revenue.
The U.S., Britain, and Canada have already announced new sanctions against Iran’s energy and financial sectors, and France is currently proposing new sanctions which would include blocking the assets of Iran’s Central Bank and suspending purchases of its oil. France is backed by Germany and Britain in this effort, however, some E.U. states have expressed reservations, because of their reliance on Iranian oil.
Both China and Russia have appealed against new sanctions which would increase the difficulty of developing Iran’s large gas reserves. Currently, Iran sits on the world’s second-largest natural gas reserves after Russia. Regardless of this, international sanctions have impaired opportunities to develop this sector.
So how much truth was there Mr. Qasemi’s statement? Possibly quite a bit. It is no secret that the U.S. has been pushing for increased European sanctions against Iran for years, however, recently there has been even more pressure due to the Undersecretary for Terrorism and Financial Intelligence, David Cohen’s, recent trips to Europe calling for increased pressure on Iran. One thing that has come out of those discussions is that Europe is concerned over what sanctions on Iranian oil could mean for Europe’s economy. That gives one pause to think that perhaps the EU will not issue new sanctions against Iran, at least not on Iranian oil. However, with new proposed sanctions being debated in the U.S. Congress that would harm foreign banks that do business with Iran, Europe may soon have no choice but to move towards sanctions on Iran’s oil sector.
The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or firstname.lastname@example.org.