Monday's decision by European Union foreign ministers to quickly turn the taps off crude oil imports from Iran will dramatically add to the pressure on Tehran to negotiate over its nuclear program.
The EU agreement will close off Iran's second-biggest market for crude oil, responsible for a fifth of oil exports. Without concessions for cash-strapped Greece or Italy, the decision forces the pace of decision-making in Tehran. Crude oil exports generate 80% of Iran's foreign earnings, without which Iran cannot pay for imports.
The US-sponsored sanctions movement means Tehran's options are constrained. Iran's next biggest oil customer is Japan, which buys 14% of exports, but the country's finance minister has already signaled that Japan wants to take steps to reduce that share. South Korea's deputy foreign minister has also indicated support for the international embargo policy, which puts another 10% of Tehran's crude exports on a declining trajectory.
India, which buys 11% of Iranian exports, might provide relief, but banking sanctions and a semi-convertible rupee mean the country's refineries already struggle to pay for the oil they do import.
That leaves China, Iran's biggest oil customer, in an exceptionally powerful position. With EU markets out of play, and no likely respite from other Asian countries, what China decides to do with its 22% share of crude oil exports will likely make or break Tehran's hopes for economic survival. But following the EU decision, Chinese leaders find themselves in an acutely uncomfortable position: they are now the arbiters of a sanctions policy they have publicly denounced.
