EU oil embargo on Iran takes effect. Gulf braced for backlash, Hormuz closure

Repaired Saudi-Iraq pipeline bypasses HormuzThe European oil embargo taking effect Sunday, July 1 blocks the sale to European Union members of 1 million, or one third, of Iran’s daily output of 3.3 million barrels a day. EU insurance firms, the biggest in the world, henceforth withhold cover from governments and firms operating tankers which carry Iranian oil.

This sanction was threatened in January if diplomatic negotiations in the interim failed to persuade Iran, the world’s fourth largest oil producer, to halt work on developing a nuclear weapon.

Three rounds of talks by six world powers (US, Russia, UK, France, China and Germany) with Iran have since ended in impasse. A fourth at a technical level is scheduled for Tuesday, July 3, in Istanbul. Braced against potential reprisals from Tehran, Saud Arabia and fellow Gulf nations have placed their armies on alert. Completing a deployment begun last Thursday for possible intervention in Syria, Saudi Arabia has massed units on its borders with Jordan, Iraq and Kuwait. The United Arab Emirates sea, air and special forces are on a state of readiness, as are US Fifth Fleet vessels in Gulf waters. While not anticipating full-scale war, they are acutely apprehensive of possible Iranian strikes against Gulf oil fields, export terminals, pipelines or tankers either by covert Al Qods Brigades squads or local Shiite saboteurs. Tehran has repeatedly threatened to treat an oil embargo as an act of war and close the strategic Strait of Hormuz to Gulf shipping in response.

Two days before the oil embargo went into effect, Saudi Arabia and the UAE activated two extra oil pipelines bypassing Hormuz and providing alternative routes for their oil to continue to flow to export markets if the Straits are blocked. The Saudis repaired and enlarged the disused “Iraq Pipeline in Saudi Arabia” –IPS, a 25-year old pipe running 750 kilometers from eastern Saudi oil fields to the Yanbu refineries and export terminal complex on the Red Sea. Riyadh is keeping its volume a trade secret. However international oil experts estimate its capacity at around one-fifth of the Saudi production of around 9.5 million bpd.


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