EU discussing plan to start Iran oil ban on July 1

Program would allow six-months grace period for existing contracts, EU diplomats say.

By REUTERS
European Union flags in Brussels 311 (photo credit: Thinkstock/Imagebank)
European Union flags in Brussels 311
(photo credit: Thinkstock/Imagebank)
BRUSSELS - European Union president Denmark has proposed that EU states launch a full embargo on imports of Iranian crude oil from July 1, allowing a grace period of nearly six months for existing contracts, EU diplomats said on Tuesday.
EU governments have already agreed in principle to impose a ban on Iranian crude as part of Western efforts to ratchet up pressure on Tehran over its nuclear program. But details of how and when the ban will be implemented are still being ironed out and are being watched closely by edgy oil markets.
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The compromise proposal aims to appease concerns among some of the EU's 27 governments about the economic impact of a ban on their economies, suffering from two years of debt turmoil.
Under the Danish proposal, EU states would have until the end of June to fulfill existing contracts once an embargo is imposed, but would have to cease all imports at the start of July.
The Danes put forward the compromise late on Sunday in an effort to bridge differences between countries such as France, which was seeking only a three-month grace period, and Greece, which was asking for as long as 12 months.
EU diplomats say the aim is to finalize discussions on the details of the planned embargo by the next meeting of EU foreign ministers on Jan. 23, paving the way for its introduction days later.
"The Danish presidency has made a proposal that the full embargo would start on July 1. There is no agreement yet," one EU diplomat said, speaking on condition of anonymity.
Denmark holds the EU's rotating presidency between January and the end of June, a role which gives it responsibility for organizing the EU's agenda and chairing policy debates.
During discussions in recent weeks, some EU states have demanded they be allowed to meet existing contracts for as long as 12 months after the ban is imposed. Greece, in particular, lobbied for leeway because of its heavy dependence on Iranian oil.
One EU diplomat said Greece was still withholding its approval for the Danish proposal, while it sought to secure alternative supplies of crude. Any decision will have to be unanimously agreed by all member states.
Another issue still being discussed was whether a review period would be agreed for the embargo. It was also unclear whether there would be a deal to impose sanctions on Iran's central bank, which is now proscribed by the United States.