The EU’s oil embargo comes into full effect on Sunday, marking a dramatic escalation in the pressure on Iran over its nuclear programme. But while the sanctions are biting deeper into Iranians’ lives with each passing day, it is less clear whether they will alter the minds of the Tehran leadership.
The July 1 deadline for the European embargo is coordinated with other measures around the world. Until recently, Iran has attempted to shrug off the tightening noose, insisting it could always find other markets. But on Wednesday, an Iranian official admitted that oil exports had dropped 20% to 30% from normal levels of 2.2 million barrels a day. The official claimed the shortfall was due to scheduled maintenance of oil wells, but the accelerating decline in sales has become impossible to hide.
Combined with a recent dip in the oil price, the shortfall in Iranian hard currency revenues is severe, and could have long-lasting damaging effects on its production capacity.
“It is running out places to store what it can’t sell. It has tankers at sea full of oil, being used as storage, but after that Iran will have to stop pumping. It will have to decommission oil wells. That is bad news for wells — it’s not straightforward to get them going again,” a western official said.
The official noted that Iran took part in three rounds of international talks over its nuclear programme this year, after insisting throughout 2011 that the programme was non-negotiable.
But Iran took a tough position at the latest round of talks, last week in Moscow. Other nations also held firm and the talks were downgraded from high-level negotiations among senior diplomats to a technical meeting among experts, due next Tuesday in Istanbul.
“I think sanctions have brought Iran to the table but I don’t think they can do all the heavy lifting at the table,” said Shashank Joshi, an analyst at the Royal United Services Institute, in London.
But there is little doubt about the sanctions’ impact on everyday life. The price of fruit and sugar, among other staples, has soared. Meat, viewed as an essential in Iranian food, has also risen in price.
“Life is much more difficult now,” said an Iranian man from Tehran, with four children. “There was a time you used to count the days for Ramadan but it has now become very worrisome. You are not sure if you can afford the cost of hosting your relatives and friends.”