iran oil - Glenn Klasner - December 12 2011
Irainian Ship Photo by Glenn Klasner
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A European Union embargo on Iranian crude oil imports could take a few months to come into effect because of a push by some EU capitals for a delay that they say is necessary to shield their debt-stricken economies, EU diplomats said on Friday.

EU capitals have agreed in principle to an embargo on Iranian oil, part of Western efforts to ratchet up pressure on Tehran over its nuclear program. Details of how the ban would be imposed are under discussion in Brussels, with the goal of having a final decision by the end of the month.

Diplomats said EU capitals have proposed what's being called a 'grace period' on existing contracts of one to 12 months. Greece, which depends heavily on Iranian crude, is pushing for the longest delay, they said.

Britain, France, the Netherlands and Germany want a maximum grace period of three months, the diplomats said.

"There is a range of ideas from one month to one year with countries who are more dependent on Iranian oil pushing for more time," one EU diplomat said, speaking on condition of anonymity.

European measures against Iran's oil industry will complement U.S. sanctions announced on New Year's Eve that aim to make it impossible for most countries' refineries to buy Iranian crude.

Iran is the second largest producer of oil among the 12 countries in OPEC, producing around 3.5 million barrels per day.

EU countries buy about 450,000 barrels per day (bpd) of Iran's 2.6 million bpd in exports, making the bloc collectively the largest market for Iranian crude rivaling China.

Several EU states depend heavily on Iranian supplies, raising concerns over economic costs at a time when Europe is struggling with a debt crisis.

Out of the biggest importers, Greece meets a quarter of its needs with Iranian oil, Italy imports about 13 percent and Spain nearly 10 percent. All three have serious debt problems.

Prime Minister Mario Monti said this week Italy would push for a gradual introduction of the embargo and would ask that deliveries to repay Tehran's debts to Italian energy firm ENI were exempted from the sanctions.

Diplomats said other aspects of the prospective embargo are also under discussion and a final decision was unlikely to be quick. Some EU capitals are suggesting the impact of sanctions is reviewed after a fixed period, with the possibility of suspending them if they prove ineffective.

The U.S. and EU sanctions have caused a steady rise in oil prices this week. International Brent futures were trading above e113 a barrel on Friday, more than e6 a barrel since Obama signed the new sanctions into law.