EU to Enact Oil Embargo Against Iran

Under an agreement negotiated today, all 27 European Union countries will sign no new oil contracts with Iran and stop importing all Iranian oil by July 1. How will Iran respond?

What's the Latest Development?

All 27 member countries of the European Union have agreed to enact a tough oil embargo against Iran. Under the agreement, no new oil contracts will be signed and all existing contracts must expire by July 1. The summer deadline was given to allow EU countries to find alternatives, especially Greece, Spain and Italy, which important more than other member states and are also in the midst of a financial crisis. Oil represents 90 percent of Iran's exports to the EU; the EU accounts for about 18 percent of all oil exports from Iran.

What's the Big Idea?

Before the EU's decision today, Iran's government had threatened to close the Straight of Hormuz if more sanctions were applied, a move that would quickly escalate tensions since about 20 percent of the world's oil moves through those waters. It is unclear how new sanctions will affect the citizens of Iran. While the EU embargo is a significant political move, Asian countries still account for about 59 percent of Iran's oil exports. A high-level visit from the UN's Atomic Energy Agency is scheduled for January 29 in Tehran.

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