Iran Stops Shipping Oil to Greece After Companies Stop Paying

Sanctions End Trade, Threaten to Increase Oil Prices

by Jason Ditz, April 06, 2012

The already tumultuous financial state in Greece looks to get worse in the near future, with the announcement that Iran is ending sales to the nation’s two major oil companies. The move comes because sanctions on Iran’s banking industry has complicated the payment systems, and the companies simply stopped paying for their oil in response.

The European Union’s sanctions on Iran have hit home in a number of ways already, and have kept the spot price on Brent North Sea Crude some $20 a barrel higher than its US equivalents. The scramble by these Greek companies, Hellenic Petrol and Motor Oil Hellas, is expected to increase prices yet again.

Hellenic explained the problem earlier this week, saying that they have been using a Turkish bank to make payments for the oil and the European Union has started blocking those transactions, even though the EU embargo isn’t supposed to begin until July.

The loss of customers the banking sanctions have created has forced Iran to rely more and more on exports to China and India, and to organize barter deals instead of cash transactions. China in particular has been reported to have negotiated a significant discount on Iranian oil for its troubles, while the EU’s supplies continue to get more expansive.

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