updated 8:43 AM EST, Mon January 23,
Fresh sanctions have been imposed on
President Mahmoud Ahmadinejad's Iran.
- NEW: The EU also freezes the assets of Iran's Central Bank
- The move is designed to get Iran to give up its nuclear
- The EU was looking for a way to impose an embargo without making
oil prices spike
- Iran says its nuclear program is not aiming at making a bomb
(CNN) -- European Union foreign ministers imposed
fresh sanctions on Iran Monday, banning the import of Iranian crude oil
and petroleum products in order to cut off sources of funding for Iran's
nuclear program, the bloc announced.
It also froze the assets of Iran's Central Bank in the EU, and blocked
trade with Iran in gold, diamonds and precious metals, it said.
And it is blocking the export to Iran of "key" petrochemical
equipment and technology from the EU, it said.
The sanctions come because of Iran's "defiance of six U.N. Security
Council resolutions and its refusal to enter negotiations over its
nuclear program," British Foreign Secretary William Hague said in a
statement from Brussels, Belgium.
Iran exports 2.2. million barrels of oil a day, with about 18% bound
for European markets, according to the U.S. Energy Information
Administration. The world consumes about 89 million barrels of oil per
Why Iran is important in the oil
The EU will allow contracts that are already in place to be fulfilled
until July 1, it said.
Saudi Oil Minister Ali al-Naimi told CNN last week that his country
could make up the difference if Iran was banned from exporting oil.
Al-Naimi said the country has a spare capacity "to respond to
emergencies worldwide, to respond to our customer demand, and that is
really the focus. Our focus is not on who drops out from production, but
who wants more."
Tehran has threatened to close the Strait of Hormuz, the only outlet to
and from the Persian Gulf between Iran and the United Arab Emirates and
Oman, as it faces possible sanctions.
The United States has made clear it will not let that happen.
The critical shipping lane had 17 million barrels of oil per day passing
through in 2011, according to the EIA.
The Iranian government gets about half its revenue from oil exports,
according to the EIA.
Analysts have said that while the new sanctions are the toughest ever
imposed, they still contain many loopholes.
Iran is expected to still be able to sell its oil to places like China,
India or other Asian countries, but perhaps at a discount of 10% to 15%.
About 35% of Iran's oil exports currently go to China and India.
Western leaders have been walking a fine line with Iran, working to
come up with a plan that squeezes the country's finances yet doesn't
result in a loss of Iranian oil exports, which could send crude and
gasoline prices skyrocketing.
The United States and United Kingdom have already put new measures in
place against Iran, and Washington has been pressing allies including
Japan and South Korea to stop buying Iranian oil.
On Friday, EU foreign policy chief Catherine Ashton challenged Iran to
respond to an offer she made in a letter last October.
Ashton wrote that world powers are open to negotiations if Iran is
serious about addressing its nuclear program without preconditions. Her
office released the letter on Friday.
Ashton's spokesperson pointedly noted, "We are waiting for the
Ashton wrote that the West wants to "engage in a
confidence-building exercise" that would lead to a "constructive
dialogue" and a "step by step approach" in which Iran would
assure the international community that its nuclear program is
Secretary of State Hillary Clinton told reporters in Washington that
"we stand by that letter."
"They have to give up their nuclear weapons program ... and they
have to be willing to come to the table with a plan to do that," she
Clinton made the comments after a meeting at the State Department with
German Foreign Minister Guido Westerwelle.
The German minister was blunt in his assessment of Iran's actions:
"Tehran keeps violating its international obligations on the
transparency of its nuclear program. We have no choice but to pass tough
new sanctions that address the financial sources of the nuclear
Iran says its nuclear program is not military, but the United States
and many of its allies suspect Iran intends to produce a bomb. The
International Atomic Energy Agency has expressed similar concerns.
"One thing is clear," Westerwelle added. "The door for
serious dialogue remains open, but the option of nuclear weapons in Iran
is not acceptable to both of us."
CNN International Affairs Correspondent Jill
Dougherty, CNNMoney's Steve Hargreaves and CNN's Claudia Rebaza and David
Wilkinson contributed to this report.