The Guardian:

EU agrees Iranian oil embargo
Foreign ministers' deal in Brussels could lead to soaring fuel prices and Iran closing the strait of Hormuz

European Union foreign minsters meeting in Brussels have given preliminary approval to ban Iranian crude oil imports

The long-running standoff between Iran and the west over Tehran's nuclear programme has shifted into a more unpredictable phase after Europe decided to impose an oil embargo on the Islamic republic.

The decision by EU foreign ministers at a meeting in Brussels raised the stakes dramatically in the war of wits between Iran and the west.

The EU decided no further oil contracts could be struck between the member states and Iran while existing oil delivery deals would be allowed to run until July.

Several countries shared reservations about the move, EU diplomats said. Greece was the trickiest problem since it imports a lot of Iranian oil on very favourable conditions. Given the financial collapse in Greece, it was in a difficult position and sought compensating measures from the rest of the EU. The impact of the embargo on countries such as Greece is to be reviewed in May.

Iran is Opec's second biggest oil producer after Saudi Arabia, and about 20% of its oil exports go to Europe. It has threatened to close the strait of Hormuz waterway if the oil embargo goes ahead, a move that would choke off global oil supplies and send international tensions soaring.

The oil embargo represents a leap in the sanctions regime against Iran, following four earlier rounds of escalating penalties.

Senior EU officials also concede that the move could be risky and send oil prices rocketing at a time of extreme economic difficulty in the west.

"We need to ensure this does not destabilise the entire global oil market," said a senior EU official.

Another EU diplomat said: "We need to see that EU countries have reliable energy supplies. But we don't want to allow Iran time to find alternative customers."

The Americans and the Europeans are leaning on countries such as South Korea and Japan to curb their imports of Iranian oil. The impact of the embargo may hinge on how China, a large importer, responds.

Brussels stressed that the new punitive measures were aimed at forcing Iran back to the negotiating table over its suspected nuclear projects. Talks between Tehran and the EU collapsed last year in Turkey.

EU officials say the Iranians have been sending signals about resuming talks in recent weeks, but that no one takes them seriously.

"Iran has the opportunity to come forward not just to talk, but to have some concrete issues to talk about. It is very important that it is not just about words. A meeting is not an excuse, a meeting is an opportunity and I hope that they will seize it," said Catherine Ashton, the EU's foreign policy chief.

While all 27 EU states signed up for the sanctions, the new regime was agreed by EU ambassadors only on Monday morning, before the foreign ministers' meeting, indicating the difficulties in striking a deal. Two meetings of the ambassadors last week failed to break a deadlock.

In addition to the oil embargo, the EU also decided to freeze the assets of the Iranian central bank, arguing that the aim was to choke off funding for the nuclear programme.

"The Iranian programmes are proceeding apace and represent a strategic threat," said the diplomat. "The aim is to have a big impact on the Iranian financial system, targeting the economic lifeline of the regime."

RT:

Iran 'definitely' closing Strait of Hormuz over EU oil embargo

Tensions in the Gulf could reach a breaking point as a senior Iranian official said Iran would “definitely” close the Strait of Hormuz if an EU oil embargo disrupted the export of crude oil.

Mohammad Kossari, deputy head of parliament's foreign affairs and national security committee, issued the warning in respone to a decision by the European Union on Monday to impose an oil embargo on Iran over the country’s alleged nuclear weapons program.

“The pressure of sanctions is designed to try and make sure that Iran takes seriously our request to come to the table,” EU foreign policy chief Catherine Ashton said.

However, with Washington’s decision to deploy a second carrier strike group in the Gulf, the EU’s attempt to pressure Iran economically could greatly increase the likelihood of all-out war in the region.

The Strait of Hormuz is the vital link between the Persian Gulf and the Gulf of Oman.

It is also one of the most strategic chokepoints in the world when it comes to oil transit.

With world oil output estimated at some 88 million barrels per day in 2011, the US Energy Information Administration estimated that some 17 million of those barrels passed through the Strait.

If economic sanctions sufficiently pressure Iran to retaliate by closing down the Strait, nearly 20 per cent of worldwide oil trade would be impacted, resulting in a massive spike in global energy costs.

With over half a million regular forces and an additional 120,000 personnel in the country’s elite Revolutionary Guard, analysts believe the consequences of a US-led war against Iran would dwarf recent Western-backed military incursions the Middle East.

Thus far, the US decision to maintain two carrier strike groups in the region has been described as “a routine activity” by Iran.

But the vast US military buildup in the region, which was bolstered when the Pentagon dispatched an additional 15,000 troops to the neighboring nation of Kuwait, was only the latest step in an obvious attempt by Washington to strengthen its military capabilities in the region.

However since 1988, when the United States managed to destroy some 25 per cent of Iran’s larger naval capability during Operation Praying Mantis, Iran has spent the last two decades preparing its Revolutionary Guard naval forces to exploit the vulnerabilities of the United States’ larger conventional forces.

According to Revolutionary Guard commander Brigadier General Jafaari, "The enemy is far more advanced technologically than we are, we have been using what is called asymmetric warfare methods… our forces are now well prepared for it," he said, as cited by Global Bearings.

Ultimately, the latest round of brinkmanship between Iran and the West may force Iran to the negotiating table over its uranium enrichment program.

However, the EU strategy of averting "chaos in the Middle East" by tightening the economic noose around Iran could spark the very conflagration it was ostensibly trying to avert.