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Worldwide: Iranian Oil Crisis

13 January 2012
Article by Nigel Kushner

Background to the Iranian oil crisis

EU sanctions

The EU oil sanctions anticipated to be announced on 23rd January will prohibit all EU countries from importing Iranian oil. The reality is that this will only impact Greece, Italy and Spain, the only EU members who import Iranian oil but it is widely expected there will be a carve out for these countries to perform pre existing contracts in order to allow a lead-in time of between 3 to 12 months. I estimate 6 months will be agreed.

Traditionally, refiners buy two thirds of their oil under long term contracts and the balance on the spot market. It is these long term contracts which will likely be subject to the carve out, with spot purchases ceasing immediately. Greece, Italy and Spain have no doubt won significant carrots in return for their agreement to play ball with their EU partners.

US Sanctions

The US oil sanctions work in a different way....
 
 
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