BICOM

European Union foreign ministers have formally adopted an oil embargo against Iran over its nuclear programme, banning all new oil contracts with the country. They have also agreed a freeze on the assets of Iran’s central bank in the EU.

There was no official Iranian reaction, but a senior Iranian MP has responded with defiance, threatening once again to block naval movement in the Strait of Hormuz. “If any disruption happens regarding the sale of Iranian oil, the Strait of Hormuz will definitely be closed,” Mohammad Kossari, deputy head of the Iranian parliament’s foreign affairs and national security committee, told the Fars news agency.

Iran threatened to attack US warships in the Strait of Hormuz, after US President Barack Obama approved tough US sanctions earlier this month. The threat, however, appeared to be empty as last week Britain joined the US and France in sending a flotilla of warships through the strait in a pointed message to the Iranian regime. Nevertheless, the threat is being taken seriously, as a hike in oil prices would threaten European efforts to stabilise their economies.

In the lead up to the meeting yesterday, European governments were struggling to agree on an embargo that gives nations dependent on deliveries from Tehran time to phase out existing contracts. Greece is in dire financial straits and relies heavily on low-priced Iranian oil. Some countries, including Britain, France and Germany, wanted a three-month deadline, whereas more financially stressed nations such as Greece, Italy and Spain were requesting up to a year. In the end, the foreign ministers agreed to a July deadline to phase out existing contacts and an agreement in principle to make up the costs Greece incurs as a result of the embargo. However, if Iran moves to close the strait, as it has threatened in the past, oil prices could spiral out of control.

In a joint statement yesterday, Prime Minister David Cameron, French President Nicolas Sarkozy and German Chancellor Angela Merkel said Iran had “failed to restore international confidence in the exclusively peaceful nature of its nuclear programme.” The leaders added, “We will not accept Iran acquiring a nuclear weapon. Iran has so far had no regard for its international obligations and is already exporting and threatening violence around its region.”

Israeli Prime Minister Benjamin Netanyahu praised the EU decision to place sanctions on Iranian oil exports, but said it was unclear if the move could thwart Tehran’s nuclear ambitions. “I think this is a step in the right direction,” Netanyahu said at a meeting of his Likud faction in parliament. “For now, it is impossible to know what the result of these sanctions will be. Heavy and swift pressure is needed on Iran and the sanctions must be evaluated according to their results.” Netanyahu said that despite world pressure so far, “Iran is continuing undeterred to develop nuclear weapons”.