Iran threatens to cut oil exports to Europe

Tehran demands lifting of sanctions at talks and warns of price swings

Iran’s oil minister has threatened to stop crude oil exports to Europe if sanctions that have put the country under huge financial pressure are not lifted during talks over its nuclear programme next month.

“We hope the Baghdad talks [in May] will be positive … if not, oil exports to Europe will definitely be cut,” Rostam Ghasemi said on Thursday. He expected “serious [price] fluctuations” in the oil market “if the talks are not positive”.

Iran and six world powers agreed last weekend to try to thrash out a solution to the impasse over Tehran’s nuclear programme. At the end of the first talks between Iran and world powers in more than a year, all sides agreed to meet in Baghdad on May 23 to try to forge a confidence-building agreement that could prevent an Israeli or US attack on Tehran.

Mr Ghasemi’s comments can be seen as part of a broader effort to force its counterparts in the nuclear talks – the European Union, US, UK, France, Russia, China and Germany – to lift part of their sanctions during the Baghdad talks.

They can also be seen as political theatre – most European nations have already cut or reduced sharply their imports of Iranian crude oil ahead of a formal embargo by July 1.

In recent months, a string of sanctions have squeezed the Iranian economy. US sanctions on institutions that do business with Iran’s central bank – which clears most of the country’s oil sales – have made it difficult for Iran to receive payments for oil exports.

Despite earlier threats to pre-empt the EU sanctions, Iran has made only a symbolic cut in its almost-zero oil exports to France and Britain. Exports to other European states, including Greece, continue, Mr Ghasemi said. Recent reports suggested that Hellenic Petroleum, a Greece-based refiner, had stopped importing Iranian oil as it was unable to transfer its payments.

Already, Iran’s top Asian buyers have reduced their purchases. Japan, one of the biggest customers of crude oil in Asia, has said it will cut imports from Iran. Mr Ghasemi said Tokyo was still committed to its previous contracts with Iran, stressing it would be “no problem” to replace Japan in the future.

The oil minister refused to give any figures on Iran’s current oil exports and production, but he said oil sales had not fallen.

There has been speculation that Iran has engaged in barter deals for its oil with countries such as India, China and South Korea. But Mr Ghasemi said he was “not aware” of any such deals and claimed Iran had received all its oil revenues through the official banking system.

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