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Washington lauds EU intent to ban Iran oil

WASHINGTON, Jan. 5 (UPI) -- The Obama administration welcomed Europe's agreement in principle to ban Iranian oil imports, increasing pressure on Iran to end its nuclear ambitions.

The decision is "very good news," State Department spokeswoman Victoria Nuland said, after European Union diplomats reported consensus was reached on an embargo and a formal agreement would likely be finalized at an EU foreign ministers meeting Jan. 30.

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The EU is considering following a U.S. move announced Saturday to impose further economic sanctions on Iran to punish it for its nuclear-research program, The Wall Street Journal reported.

The U.S. move penalizes foreign companies that do business with Iran's central bank, which collects payments for most of Iran's energy exports.

"These are the kinds of steps that we would like to see not just from our close allies and partners in places like Europe but from countries around the world, because we do believe that this is consistent with tightening the noose on Iran economically," Nuland said. "We think that the place to get Iran's attention is with regard to its oil sector."

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Oil represents about 60 percent of Iran's economy, and oil exports are a vital source of foreign currency.

European countries bought about 18 percent of Iranian oil in 2010, about 450,000 barrels a day, with most of the rest of Iran's 2.6 million daily barrels going to Asia.

Iranian oil accounted for about 6 percent of Europe's total crude imports in 2010, with Spain, Greece and Italy the most reliant on shipments from Iran.

Under the tentative EU deal, Madrid and Athens would have a grace period to break oil contracts with Tehran and seek alternative oil supplies, European diplomats told the Journal.

Italian Prime Minister Mario Monti said this week Italy would support an oil embargo if deliveries to repay $1.3 billion in Iranian debts to the Italian oil and gas company Eni SpA were exempted. The Italian government and state treasury own 50 percent of Eni.

EU officials did not reach consensus on the timing and duration of the sanctions, diplomats said.

One diplomat told the British newspaper The Guardian the sanctions could go into effect at the same time as the U.S. sanctions President Barack Obama signed Saturday.

Iranian defense officials this week responded to the sanctions efforts by test-firing new missiles, threatening to shut the Strait of Hormuz to shipping, holding naval war games, announcing the production of its first nuclear-fuel rod and warning a U.S. aircraft carrier not to return to the Persian Gulf.

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Iran's Parliament considered a bill Wednesday requiring all foreign warships to gain Tehran's permission to enter the strategic shipping choke point.

Ships traversing the narrow strait, through which 40 percent of world oil flows, pass through territorial waters of Iran and Oman under the transit passage provisions of the U.N. Convention on the Law of the Sea.

Citing Iranian analysts said the bill would probably not have been introduced if it were not supported by higher authorities, The Washington Post reported.

U.S. and European officials said they were not concerned about Tehran's threats.

"We believe that the United States needs to continue to play the global role that we have played for a long time in terms of ensuring and promoting freedom of navigation in international waters, and our policy will continue to reflect that," Nuland said Wednesday.

"We consider [the strait] international territory," she said.

U.S. and European officials, supported by the International Atomic Energy Agency, allege Tehran intends to use its nuclear-research program to build nuclear weapons.

Iranian officials insist their nuclear goal is to generate electricity without dipping into the oil supply they prefer to sell abroad, and to provide fuel for medical reactors.

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