Iran’s threat this week to cut off oil to some European countries ahead of a boycott planned for July would do little harm to the continent’s powerhouse countries. But Greece has been deeply dependent on Iran’s oil, which it purchases on generous terms of credit, crucial when few others trust Greece to ever pay them back.
Greece’s need for Iranian crude oil was the main reason a European Union boycott approved in January was delayed from going into effect until July, European diplomats say. And the possibility of a sudden cutoff in the midst of a catastrophic recession has many Greeks worried, despite European assurances that an alternative supplier would be found.
“It’s not a coincidence that Iran is targeting Greece right now, because Greece is the weak link of the European Union,” said Georgios Filis, a lecturer in international business at the American College of Greece. “We’re going to find ourselves in a very desperate situation.”
Whether the cutoff happens now or in July, the new suppliers will almost certainly be less generous with Greece, driving up gasoline and heating oil prices and further dampening the country’s economy as the government struggles to reduce debt and fight unemployment that has soared to 21 percent.
Many officials question whether Iran would actually carry out its threat to cut off oil to Greece, France, the Netherlands, Italy, Spain and Portugal if they do not continue their long-term contracts. The threat was reported by the semi-official Fars News Agency.
But the prospect underscores the problems the European Union faces with both its diplomacy and its energy supplies, experts say. Although the bloc’s 27 countries strive for unity when confronting threats such as Iran’s nuclear program, their disparate energy sources often complicate those efforts.
A similar dynamic was on display last year with Libya, when Italian Prime Minister Silvio Berlusconi initially hesitated to commit to international intervention when Libyan protesters were under attack by their own government, in part because of Italy’s dependence on Libyan oil supplies.
E.U. regulations require each member country to have a 90-day supply of oil on hand, so Greece would be able to hold out for some time while a new supplier, most likely Saudi Arabia, was lined up to fill the hole a boycott would create. Greece imports roughly a third of its oil from Iran, about 100,000 barrels a day, said Leo Drollas, chief economist of the London-based Centre for Global Energy Studies.
Other oil suppliers want credit drawn from foreign banks, not Greek ones, because of the risks of the latter collapsing, he said.
“It essentially means prepaying for the oil,” he said. “A very large crude carrier carries 2 million barrels of oil. For a refiner to have to prepay, that would cause havoc with its cash flow.”
Elsewhere in Europe, reaction to the Iranian threat of a cutoff was muted Thursday, both because most countries have already reduced their imports and because few were deeply dependent on Iran’s oil in the first place.
“If they were to cut it off earlier, we would accommodate quicker, that’s what we’d do,” E.U. Trade Commissioner Karel De Gucht told reporters during a trip to Hong Kong, according to Reuters.
Oil is not the only energy need that has led Greece toward countries that at times use supply cutoffs as a political weapon. Greece’s natural gas demands have recently sent it toward Russia, which has cut off supplies to Ukraine and others during political disputes. Europe has sought to become less dependent on Russian natural gas, with mixed results.
The leader of Greece’s New Democracy party, Antonis Samaras, who is expected to become prime minister after April elections, visited Russian Prime Minister Vladimir Putin in Moscow last month to promote energy ties between the countries.
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