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European leaders agree to oil sanctions for Iran

An oil tanker leaves the French Total group refinery of Grandpuits after filling up the tank, outside Paris. Europe can soon expect much less oil from Iran.

Steve Chiotakis: European officials meeting in Brussels today have reportedly agreed to an Iranian oil embargo. It's the latest move by the west to punish Iran for its nuclear ambitions. And it follows a U.S. move to sanction Iran's central bank.

The BBC's James Reynolds covers Iran. He's with us now from London with the latest. Hey James.

James Reynolds: Hi, how are you?

Chiotakis: I'm doing well. The U.S., of course, has long banned the purchase of Iranian oil, but Europe has not. Why the recent signals by Europe that it's going to change tactics?

Reynolds: Because essentially, it wants to go after Iran where it hurts. There have been a number of sanctions -- of rounds of sanctions - in recent years against various individuals, against the nuclear program, against the military program. But oil is how Iran gets its money, and it's how the government stays in power. So when EU foreign ministers were scratching their heads thinking: now, how are we really going to make our point made? I think they decided then to go against oil.

Chiotakis: Does all this saber rattling, do you think, and worries over oil markets just benefit Iran by increasing oil prices?

Reynolds: That's certainly one immediate reading of it, yes. Iran gets more than 60 percent of its state revenue through the export of oil. And if the price of oil goes up, it gets more revenue. So in that way, bluster, rhetoric, moving up -- the price of oil benefits Iran.

But in the medium to long-term, I think there will be worry in Tehran, because if the European Union starts moving away from Iranian oil, that accounts for 17 percent of Iran's oil exports.

Chiotakis: The BBC's James Reynolds in London. James, thanks.

Reynolds: My pleasure.

About the author

Steve Chiotakis was the host of Marketplace Morning Report until January 2012.
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