Fighting sanctions with sanctions in a trial of strength with the West over its nuclear ambitions, Iran warned on Friday that it might halt oil exports to Europe next week in a move calculated to hurt ailing European economies.
At the same time, the government in Tehran, grappling with its own economic crisis under Western trade and banking embargoes, will host a rare visit today by UN nuclear inspectors for talks that could relieve diplomatic pressure as the ruling clergy struggle to bolster public support.
Amid forecasts Iran might be able to build a bomb next year, and with US President Barack Obama facing re-election campaign questions on how he can make good on promises not to tolerate a nuclear-armed Islamic Republic, a decade of dispute risks accelerating towards the brink of war.
For all the tension, there was little market response to Friday’s talk by members of Iran’s parliament that they could vote today to stop sending oil to the EU as early as next week.
In Tehran’s parliament National Security Committee Vice Chairman Hossein Ibrahimi was quoted by the semi-official Fars news agency as saying: “[Today], parliament will have to approve a ‘double emergency’ bill calling for a halt in the export of Iranian oil to Europe starting next week.”
Echoing Iranian President Mahmoud Ahmadinejad, who said on Thursday that Europe would be the loser from its sanctions policy, cleric Ahmad Khatami who led Friday prayers at Tehran University said: “Why wait six months, why not right away? The answer is clear. They are in trouble; they are grappling with crisis.”
The EU accounted for 25 percent of Iranian crude oil sales in the third quarter of last year, but China, India and others have made clear that they are keen to soak up any spare Iranian oil, even as the US Department of the Treasury takes measures to choke Tehran’s US dollar trade.
The EU’s response was muted, saying only that Iran’s intentions had been reported and repeating that the goal of sanctions was to pull Tehran, a signatory to treaties banning the spread of nuclear weapons, back into negotiations intended to ensure its nuclear program was transparent and peaceful.
“We want to see Iran coming back to the negotiating table, engaging in meaningful discussion on confidence-building measures and demonstrate the willingness to address concerns over its nuclear program, without preconditions,” said Maja Kocijancic, spokeswoman for the EU’s High Representative of the Union for Foreign Affairs and Security Policy Catherine Ashton.
In Paris, where French President Nicolas Sarkozy has been vocal in criticizing Iran, French Ministry of Foreign and European Affairs spokesman Bernard Valero said that EU countries were already in the process of finding alternative supplies of oil.
Iran’s conservative-dominated parliament has previously shown it is ready to force the government to take action against what it sees as hostility from the West, and oil analyst Samuel Ciszuk said it was likely the assembly would pass the EU ban.
However, an abrupt halt might, force Iran to offer discounts to other buyers in order to shift excess output, he added.
Asian buyers might be tempted but are also wary of US disfavor: “Even though China and India could take the opportunity to capitalize on Iran’s weakness, they currently have little appetite for the resulting international fallout,” Paul Tossetti at consultancy PFC Energy in Washington said.