Europe Debates Iran Oil Sanctions Amid Debt Crisis

January 13, 2012

Iran's President Mahmoud Ahmadinejad (L) stands with former Cuban leader Fidel Castro, in Cuba, January 12, 2012.

Europe is gearing up for a summit later this month on a new set of sanctions against Iran's oil industry, following a similar move by the United States. Analysts say the EU members who are the worst-hit from the euro debt crisis stand to lose the most from any sanctions

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With sanctions tightening, Iran’s leader toured South America, including a stop in Cuba Wednesday. President Mahmoud Ahmadinejad is looking for new friends and new markets.

The U.S. has already imposed sanctions on oil companies trading with Iran, in response to Tehran's nuclear enrichment program. Now it's Europe's turn. The EU will meet on January 23 to agree on its own embargo.

Professor Paul Stevens of the London-based analyst group Chatham House, said agreement won't be easy. Europe's most indebted countries are also Iran's main customers.

“Particularly Greece, for example, is dependent for about a third of its oil imports on Iran, on very favorable financial terms and given the situation in Greece, they would not give that up lightly. Also, Italy, for example, is owed quite a lot of money, or the Italian company ENI is owed quite a lot of money by the Iranian government, which is being repaid in oil,” said Stevens.