Brussels said it was not worried about even an abrupt halt in Iranian oil exports to Europe, saying that several member countries had already begun to reduce their imports from the Islamic Republic.
Britain has imported no Iranian oil since February 2010, according to the EU, while International Energy Agency estimates put France's average imports at just 58,000 barrels per day (b/d) in 2011.
Nevertheless, Tehran's announcement helped push an already tense oil market higher.
North Sea Brent crude futures traded up to $121.15/barrel (bbl) on Feb. 20, $1.57/bbl up from the previous close and the highest level for the front-month contract since May last year. At 1313 GMT, Brent traded $120.10/bbl.
Conflicting statements from Iran on the status of exports to Europe rattled markets the week ended Feb. 17, with Press TV saying Feb. 15 that exports to six countries had been cut and the oil ministry subsequently refuting the report.
But a statement on the oil ministry's website a few days later said no oil would be delivered to the UK and France.
"The Islamic Republic has stopped oil exports to British and French companies," the statement quoted oil ministry spokesman Alireza Nikzad as saying Feb. 19.
"Following an official announcement by the foreign ministry, the oil ministry has refused to deliver crude oil to British and French companies."
The European Commission (EC) said Feb. 20 that Europe was currently well stocked with crude and refined products and would be able to withstand any "abrupt" halt in oil supplies from Iran.
Indeed, it said, the main EU consumers of Iranian oil—Greece, Italy and Spain—had already starting reducing imports ahead of the ban set to come into effect on July 1, while some countries had not taken in Iranian crude for some time.
EU Is Well Stocked
"The EU is well stocked with oil and petroleum products to face a potential disruption of supplies," a commission spokesman said in an email.
Current stocks amount to 136 million metric tons (Mmt), equivalent to 120 days of consumption—and well above the 90-day minimum—and also to 4.5 years of EU imports from Iran, he said.
"The continuity of supplies of crude oil and petroleum products to European consumers should therefore not be immediately affected, even in case of an abrupt halt of all imports from Iran," he said.
To date, no EU member state has indicated a need for a consultation or for a release of emergency stocks, which is required before stocks can be supplied to the market.
A number of EU countries have stopped importing oil from Iran ahead of the ban, which was agreed on Jan. 23.
Belgium halted imports of crude at the beginning of 2012 and the Czech Republic has not bought Iranian oil since July 2011, while in the Netherlands, "at the moment there are no imports any more by Dutch companies," the commission said, adding: "The last company which was importing from Iran decided to stop in January."
Austria and Portugal also halted oil imports from Iran in 2010.
Meanwhile, the three countries most dependent on Iranian oi—Greece, Italy and Spain—have begun cutting volumes. The commission said supplies to Greece from Iran reached a peak of 70% in September 2011 but then decreased.
"In mid-February, an Iranian cargo intended for Greece was diverted and unloaded in Turkey," it said.
Supplies to Spain in January 2012 were "less than half" of the 2011 monthly average. while Italy's December imports were almost 50% lower than those in June.
"But refiners will buy Iranian oil as long as possible," the EC said in reference to Italy.
The commission said it had no official information for France but said Total had stopped importing Iranian crude.
Total Taking Saudi Crude
Total chief executive Christophe de Margerie said Feb. 20 that the company was currently sourcing crude from Saudi Arabia and elsewhere to replace the volumes it had previously imported from Iran.
"We have access to Saudi crude and other sources of crude," de Margerie told a small group of reporters in London.
Total, he said, is not suffering as a result of having stopped buying Iranian oil but has found it "embarrassing" to have had to find alternative supplies.
"It's embarrassing to have to find alternative sources, but the message from the trading division is that they are not suffering," de Margerie said.
De Margerie also said the volumes of Iranian oil affected by the EU ban were small, and should not affect the global market.
He said Iranian exports to OECD markets amounted to only around 700,000 b/d and that the country was likely to be able to find new takers for the oil.
"Can they [Iran] find customers for this? I think they can. Is it hurting their traditional routes? Yes, but I don't see why this should trigger any additional price for crude oil," he said.
De Margerie did say, though, that the speculation around the EU's embargo on Iranian oil was what was pushing the market higher.
"All the noise on whether [the ban] will affect the price is what is affecting the price," he said.
Stuart Elliott, Platts