Iran to cut oil exports to ‘hostile’ European states

Iran is planning to cut oil exports to hostile European states, to pre-empt an EU embargo due to come into force on July 1, but putting European people under pressure in winter is not the country’s goal, Rostam Ghasemi the oil minister has said.

“We will certainly cut [oil exports] to some European states,” Mr Ghasemi said on Saturday. But he gave no indication on timing nor did he identify which countries would be Iran’s target because of their “more hostile positions”.

Mr Ghasemi’s comments will fuel suspicions that the Islamic regime may only symbolically pre-empt the European Union oil embargo.

By hostile European states, Iran usually refers to Britain, France and Germany, which do not buy much of its oil and were behind last month’s move to impose an oil embargo and ban member states from buying Iranian oil.

The EU’s July deadline is intended to alow time for Greece, Spain and Italy, Iran’s biggest European customers, to find supplies from other oil producers such as Saudi Arabia, Russia and Iraq. Saudi Arabia, Iran’s main regional rival has said it can meet any shortage in the oil market.

Iran’s oil exports to Europe constitute 18 per cent of the country’s total sales The EU embargo is intended to put pressure on Iran halt a nuclear programme that western governments believe is for military purposes.

He said Iran would not retreat from its nuclear programme, should the EU oil embargo go ahead in July, but did not anticipate any tensions in the Strait of Hormuz, a strategic waterway through which a third of the world’s seaborne oil trade passes.

“Even if we do not sell one barrel of oil, we will not take one step back from our demands in the face of US [pressure],” he said.

Some Iranian parliamentarians pushed for legislation to pre-empt the EU’s embargo to deprive European states of time to find substitute sources of oil, a move that would have affected the economically weak countries of southern Europe. But the oil ministry is believed to be against the move on the grounds that it would harm Iran more than Europe.

Mr Ghasemi denied there were any differences between the oil ministry and the parliament over Iran’s response to the sanctions.

He said he hoped the EU would “revise” its decision even though said exports to Europe were not a considerable figure in Irans’s oil production.

Mr Ghasemi said he had recently written to the Organisation of the Petroleum Exporting Countries, urging member states “to observe each other’s rights” and he hoped Saudi Arabia would respond positively to the demand.

It is not clear yet which countries would be Iran’s new customers amid signs that some non-western customers, such as Japan, South Korea and Turkey, may also reduce their oil imports from Iran.

Mr Ghasemi is due to visit China, Iran’s largest oil buyer, in the next 10 days.

He told reporters that Iran would not give any discounts on its oil to China nor any other country and has not done it so far. He said Iran had not yet resorted to barter deals in face of problems in financial transactions but “if one day it is deemed necessary, it will not be a complicated issue”.

But so far, he said, oil revenues are transferred into the country through “different ways” and “numerous friends”.

Copyright The Financial Times Limited 2012.