UPDATE 2-Iran could ban EU oil exports next week -lawmakers

Fri Jan 27, 2012 6:53am EST

Related Topics

* Parliament to vote on EU oil ban Sunday

* Aims to deny EU 6-month phase-in of embargo

* EU agreed on Monday to ban Iran oil imports from July 1

* Populist move could cause glut, may force Iran to discount (Adds EU reaction, analyst comment, Friday prayers, oil price impact)

By Hashem Kalantari and Robin Pomeroy

TEHRAN, Jan 27 (Reuters) - A law to be debated in Iran's parliament on Sunday may halt oil exports to the European Union as early as next week, foiling an EU plan to phase in an oil embargo gradually to help its struggling economies adapt, lawmakers said on Friday.

"On Sunday, parliament will have to approve a 'double emergency' bill calling for a halt in the export of Iranian oil to Europe starting next week," Hossein Ibrahimi, vice-chairman of parliament's national security and foreign policy committee, was quoted as saying by the semi-official Fars news agency.

Parliament is pushing for the export ban to deny the EU a six-month phase-in of the embargo on Iran's oil, which the bloc agreed on Monday as part of a raft of tough new Western sanctions aimed at forcing Iran to curb its nuclear programme.

The EU accounted for 18 percent of Iranian crude oil sales in the first half of 2011, according to the U.S. Energy Information Administration (EIA), making it Iran's second-biggest customer after China.

"If the deputies arrive at the conclusion that the Iranian oil exports to Europe must be halted, parliament will not delay a moment (in passing the bill)," Fars quoted Moayed Hosseini-Sadr, a member of parliament's energy committee, as saying.

"If Iran's oil export to Europe ... is halted, the Europeans will surely be taken by surprise and will understand the power of Iran and will realise that the Islamic establishment will not succumb to the Europeans' policies," he said.

Indicating the plan had the support of Supreme Leader Ayatollah Ali Khamenei, the leader of Friday prayers at Tehran university mocked the EU's decision to phase in sanctions.

"Why wait six months, why not right away? The answer is clear. They are in trouble; they are grappling with crisis," hardline cleric Ahmad Khatami said.

The EU gave a muted response to the news.

"Yes, we have seen the reports about Iran's intentions," said a spokeswoman for EU foreign policy chief Catherine Ashton.

"But we have introduced our measures because of extreme concerns regarding Iran's nuclear programme. Sanctions are not the goal in itself," Maja Kocijancic said.

"We want to see Iran coming back to the negotiating table, engaging in meaningful discussion on confidence-building measures and demonstrate the willingness to address concerns over its nuclear programme, without preconditions."

BACK FOOT

Iran's conservative-dominated parliament has previously shown it is ready to force the government to take action against what it sees as hostility from the West, and oil analyst Samuel Ciszuk said it was likely the assembly would pass the EU ban.

"From a strictly political point of view, it makes sense to demonstrate Iranian resolve and that it is not on the back foot, particularly as the measure could hit European refiners at a time of deep economic weakness," said Ciszuk, Middle East and North African (MENA) analyst at consultancy KBC Energy Economics.

The sudden loss of such a big customer would create problems for Iran too, however, and may force it to offer discounts to other buyers in order to shift excess output.

"They would not be able to cater for that many days' production in their floating storage capacity, which means NIOC (National Iranian Oil Co.) would be under immense pressure to place the volumes very quickly - translating into having to offer discounts, most likely," Ciszuk said.

The news helped push Brent crude above $111.

In November parliament voted to expel the British ambassador after London announced new sanctions ahead of other EU countries. The day after that vote, radical Iranians stormed the British embassy, causing London to withdraw all staff and close the mission.

Iran says its nuclear research is intended for civilian purposes only, but the United States, the EU and others dispute that claim, and the U.N.'s International Atomic Energy Agency said in a November 2011 report that Iran had engaged in activities consistent with weapons development.

Senior IAEA inspectors are arrive in Iran on Sunday for a three-day visit that will be closely watched by the EU and Washington for signs of any change of position that might lead to a resumption of talks that stalled a year ago. (Additional reporting by Justyna Pawlak in Brussels; Writing by Robin Pomeroy; Editing by Jane Baird)

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