EU advisor: Iran-imposed sanctions to affect non-EU countries

Posted on June 13, 2012

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The sanctions imposed on Iran will also have consequences for non-EU countries which purchase Iranian oil and use their refineries to produce oil-based derivatives, EU economic advisor Mehrdad Emadi believes.

Emadi noted that since crude is a sanctioned product, the EU may include business entities from these countries in the list of facilitators to circumvent sanctions and impose sanctions on them.

“A further step may be to impose trade restrictions on entities which provide financial facilities to enable such purchases to take place,” he added.

The EU in January embargoed purchases of Iranian crude but let those with existing contracts continue importing until July 1.

The West suspects Iran is trying to develop atomic bombs, while Iran says its nuclear work is solely for civilian purposes.

“Banks and insurance companies outside the EU which accommodate new or existing oil purchases from Iran may find themselves facing an array of financial penalties or market access restrictions to the EU markets because of their dealings with Iran in the context of oil transaction,” Emadi explained.

Advisor noted that oil revenues earned by Iran from its export of crude may see a further fall as much as may be 20 percent or even a little higher.

“Given that the presented budget for the new Iranian year requires a price per barrel of above 108 dollars to balance the budget, such a fall on top of the shrinking exports and market shares paves the way for an unsustainable level of consumption and spending in the economy with serious possible social consequences,” Emadi said.

Advisor underscored that in this context, the July 1 EU sanctions may tip the balance in a more decisive way.

He added that the July 1st sanctions may yet again prove as costly to both sides but much more to Iran in terms of lost revenue and markets.

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